The tax paperwork from IB was always sufficient for my accountant to prepare my Swiss tax return. No problems on that front. No need to track capital gains in Switzerland. The annual account statement showing account balance was good enough for wealth tax, and the dividend reporting paperwork was all that I needed for reporting dividend income.

Great news, especially considering it is free! Thanks for confirming.

Hey there, I just read the full 14 pages of discussions and these have been very useful. Thank you for your great contributions !

I am based in Switzerland and I'm thinking about opening an IB account with a very "inactive" investment strategy, meaning essentially that I want to buy and hold Blue chips Swiss (and possibly foreign) stocks for horizons > 5 years.

The reason I came here initially is of course the search of minimal transaction+account management fees.

Since the account balance would be >100k USD I understand that the inactive account would cost me zero (in case I just hold my stock positions). For the record, my Swiss account is at postfinance, but I understand that regular bank transfers to the IB account would be cost free.

I have one more question to feed the debate.
As mentionned here, the confederation does not tax stock profits (e.g. if I sell a stock for CHF 2 after having bought it for CHF 1), but heavily taxs dividends; which is actually a big issue given my original plans (buy and hold swiss blue chips).
So I was wondering if alternatives exist to bypass the problem. e.g. some kind of "total return" stock or some ETF linked to a total return index. Essentially, I would be looking to take an exposure to stocks paying dividends (Roche, Swatch group, Swisscom, UBS, whatever...) in a total return asset, where the dividend is automatically reinvested.
Any idea if such a thing exists ?
I'll start doing research on my own and edit if I find something interesting.

Thanks again for the very helpful topic !

CHF or EUR transfers from PF would be free, but not USD

So don't buy stocks for the dividend, but for total return? Internal compounding is superior to dividend reinvesting.

These are called accumulating funds, and they're taxed to bejesusses in Switzerland on reinvested dividends. Even the synthetic types where there are no dividends inside at all I hear are treated by ESTV as if they received dividends. Best check your fund on ICTAX before buying

Thanks for your reply Ivank, and all the previous ones on this topic.
Regarding the transfer to the IB account, I would be transfering CHF from my PF account. So we're good

About your first explanation on dividends, I agree with your conclusion but then it would mean to avoid taking exposure on Swiss stocks which pay a dividend... which is not easy if you want to focus on blue chips + long term buy&hold.
Given your last explanation on accumulating funds I guess that the solution you suggest (buy stocks which pay small/no dividends and instead invest or rebuy their own share) is probably the only one.

That's not exactly what I suggested. Buybacks of overvalued shares especially if funded by debt issuance rather than profits are even worse.

Most of the stocks that you've listed pay between 2-3% in dividends. Assuming you've got 100K invested, you're talking about 3K of dividends a year. At a 33% tax rate, that's 1'000 in tax each year.

It's not nothing, but I wouldn't let this alone be the decision-making criteria for whether to buy a stock or not. Long term growth and prospects for success are much more important, and a consistent, reliable, growing dividend can be a good sign of the overall fiscal health of the company.

On the other hand, if you were to gear a portfolio to be strongly dividend-focused (income-generating, for retirement, for example), this is probably not the wisest decision with the way the Swiss tax dividends. In the US, on the other hand, this is a smart strategy given the much lower taxation of dividends vs. earned income.

Can you elaborate? Are you saying in US of A dividends are not counted as income, but capital gains are?

US taxes dividends from long term holdings separately and at lower rates than ordinary income. The search term you're looking for is "qualified dividend".

They also tax capital gains at similar rates, so that's why dividend growth investing makes a lot of sense there - there's not much difference tax wise between dividends and capital gains anyway.

But not in Switzerland. Here dividends are taxed to death and capital gains are tax free, so you should adapt your investment strategy accordingly

I guess I'll keep my CH residence at least until I retire.

Dear all

I am looking for a cost effective method to transfer CHF from Postfinance to Singapore. Learnt about the option via IB but am not really keen to start trading anything...

So would appreciate if someone could enlighten me if it is worth the trouble to open an IB account just for the big amount transfer CHF-SGD? Any other costs I need to be aware of....

Thanks!

The answer depends on how big, and what other options do you have and how much they cost. Give your bank a call and ask what spread they can offer you, some people reported PF's trading desks can be very, very generous with spreads on the phone, much lower than their online offers

Indeed I think you need to be talking 25k plus in CHF for a quote. I got a good deal last year on a 100k plus transaction. Ive since left UBS for PF especially given their custody fees. Doesn’t PF let you open an SGD online account? On my GBP transactions Ive gotten a good deal from my EUR/CHF account on rates, additionally my UK bank doesn’t charge me to receive in GBP and the transfer costs 2CHF IIRC, once I secured my exchange rate between my various currency accounts. They’re also handy when ordering cash in the denominations of your choice before a trip.

Exactly how good in terms of spread?

Actually they're not so good with regards to this. Custody costs nothing with most of better brokers. And trading fees are outrageously high at both

Which is going to cost you big time, at least 1% last time I checked

It’s true they started to charge 1% on € non-ATM transactions, it depends on whether you think 1% is worth getting the denominations you want especally once you save on the exchange spread between accounts which is usuly at least 1% better although YMMV depending on amounts and if you’re a Plus customer.

I use the Online Banking Messaging a bit to reclaim fees usually successfully

No. If I need cash, I'd usually get a better deal withdrawing from a local ATM with Revolut or Schwab card. Most of the time I don't need cash, credit cards are widely accepted in developed world.

You still didn't mention the spread of a "good deal" that they gave you... If it was 1% which you seem to imply you think is good, then bad news for you - you got ripped off. For a tight spread you apparently do have to phone them, and even then you won't get the spreads as low as with IB - IB's spreads are on the order of 0.01% or about 0.5-1 pips, at least for major currencies like USD, EUR, GBP.

I've had a negative experience with them once, always negotiate in advance, not after the fact.

Thanks. If you look at the quote in my message you’ll see my answer starting with Hi, IIRC it was 2-3% better....after the first line quoted.

I’ve no idea how it got lost from the message, I was replying on my mobile in a shopping centre.

Thanks for the IB comparative. I was aware of Schwab so I’ll take a closer look.

For all accounts don’t forget to include them all on the Tax return. According to a report I read recently 1 in 47 taxpayers in Kanton ZH have self reported previously unlisted accounts abroad utilising the 2011 Amnesty provisions, suspected to be a result of the Common Reporting Standard, but that’s another thread entirely.

You must be a lawyer, judging from such completely non-informative answers... What was the spread from mid market rate? Or the exchange rate and date, we'll look it up.

Most credit cards don't have good exchange rates. That's where Revolut comes in handy.

The USD is getting weaker and weaker... Will trump want it to stay weak and is this bad news for IB investors who mostly trade USS?