Tax with ETF from US, Ireland or Swiss

[Minimalistefrugaliste]

Hi everyone.

I tried with my tax program. From my canton in Vaud. Do a simulation if I have a ETF from US, Ireland and Swiss.

I calculate how much I will pay with tax if a have a ETF from US, Ireland or Swiss.

I will write that my conclusions. And Don't worry for to write me if I'm wrong.

With ETF from Switzerland. I did tax 35% anticiped tax.

With etf form Ireland. I didn't tax

With ETF from US. I did tax 15% US tax + 15% anticiped tax = 30% total.

But...

I'm surprised with the taxe. Because I understood that I Paid. It's the same with the 3 ETF.

Actually, even the tax are different with the 3 ETF. I paid the same money in dividend tax.

Do you know if I'm right? I always think that US dividend it's the cheapest in tax.

thank you

 

[Baptiste Wicht]

Hi

Excellent question and test!

Your findings are correct, but your conclusion is not

WIthholding is the same on the Swiss level:

1. 35% for Swiss ETF
2. 0% for Ireland ETF
3. 30% with a US ETF

However, you are missing two points:

First, you can reduce the withholding to 15% on US ETFs by filling a W8BEN form (IB does it well). And you reclaim this 15% on your DA-1 form.

Second and more important, the tax efficiency of US ETFs comes from withholding abroad. And it only matters for US dividends. If you use an Ireland fund with US stocks (like S&P500), the US will tax 15% at source (at the fund level), so you will not see these 15%, they are gone and you cannot reclaim them. With a US ETF, this withholding is done at your level, so you can reclaim it.

So, by using US ETF over an IE ETF, you are savings 15% of US dividends.

 

[AGZH86]

Hi

Excellent question and test!

Your findings are correct, but your conclusion is not

WIthholding is the same on the Swiss level:

1. 35% for Swiss ETF
2. 0% for Ireland ETF
3. 30% with a US ETF

However, you are missing two points:

First, you can reduce the withholding to 15% on US ETFs by filling a W8BEN form (IB does it well). And you reclaim this 15% on your DA-1 form.

Second and more important, the tax efficiency of US ETFs comes from withholding abroad. And it only matters for US dividends. If you use an Ireland fund with US stocks (like S&P500), the US will tax 15% at source (at the fund level), so you will not see these 15%, they are gone and you cannot reclaim them. With a US ETF, this withholding is done at your level, so you can reclaim it.

So, by using US ETF over an IE ETF, you are savings 15% of US dividends.

are you sure you need a W8? in kt AG if i reach 100 chf of withholding tax on US with-tax, they give it back to me, but i just need to declare the dividends. first time i see i need to do a w8?
if i don't reach 100 chf, they reduce the dividends by 15%, so i don't get anything back, but income is reduced too

 

[Baptiste Wicht]

You should always do a W8BEN, but you only need to do it once. Without it, you will get 30% withholding. The W8BEN is with your broker.

Below the 100 CHF in reductions, it's still better to pay 15% withholding than 30%, no?

 

[AGZH86]

You should always do a W8BEN, but you only need to do it once. Without it, you will get 30% withholding. The W8BEN is with your broker.

Below the 100 CHF in reductions, it's still better to pay 15% withholding than 30%, no?

I'm looking at my IB statement from 2023.
dividend: 37.08
w tax: 5.56

seems 15% to me?
what am i missing?

 

[Baptiste Wicht]

If you are already getting 15% withholding, you already filled the W8BEN! It's often filled as part of onboarding if you do it correctly

 

[AGZH86]

If you are already getting 15% withholding, you already filled the W8BEN! It's often filled as part of onboarding if you do it correctly

thanks! actually i think that if you get 30%, you still could enter in easy tax that the 30% deduction, at least i have this option, but i've not verified in detail