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  #41  
Old 17.09.2013, 21:08
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Re: Low cost Investment Funds in Switzerland

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At least three forum members (kiwiguy08-fatmanfilms-SwissIT) already suggested that the best option is to go for a US broker.
I will ask them or anybody who knows the following question:
If you invest with your US broker 100000 and at the end of the year you made a 10% profit so you have 110000.
How much the US will take from those 10000 profits in taxes? (Supposing that you are a Swiss resident?).

I am obviously trying to compare with Switzerland where in principle if you have 1 fund or ETF for 1 year and make a 10% profit you pay NO taxes.

(I know that nobody trades like this, but I am trying to make myself and idea of how much tax do you pay on your US brokerage account)

If you can indicate where the rules for taxes on US investments from Switzerland are explained I will appreciate it.
Zero assuming your not American or a US person.
The rules are the same.........
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  #42  
Old 18.09.2013, 14:45
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Re: Low cost Investment Funds in Switzerland

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Still not understanding why noone is considering interactivebrokers....they have far and away cheaper prices than postfinance and swissquote.
They're cheaper if you're investing on US exchanges for sure, but if you want to keep your money in CHF then their commissions for buying Swiss-listed ETFs seem to be worse

Swissquote - 9CHF flat
Ineractive Brokers - 0.1% min 10CHF (so would be 100CHF if you invested 100k)

If you have to convert to USD though and what you want to invest in is only traded in the US then yes they definitely look better
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  #43  
Old 18.09.2013, 20:13
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Re: Low cost Investment Funds in Switzerland

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They're cheaper if you're investing on US exchanges for sure, but if you want to keep your money in CHF then their commissions for buying Swiss-listed ETFs seem to be worse

Swissquote - 9CHF flat
Ineractive Brokers - 0.1% min 10CHF (so would be 100CHF if you invested 100k)

If you have to convert to USD though and what you want to invest in is only traded in the US then yes they definitely look better
Thanks for that ! (still no thank you button for me because I am a Newbie)

I will also add that the high comision also arises for trading in euros. I wonder why IB commissions are much higher in EUR and CHF than in USD. I guess it is just that USD is a much bigger market.

So to trade in EUR and CHF Swissquote looks good, to trade in USD Interactive Brokers is much better than any swiss option.

I guess we will have to learn to deal with the currency risk and trade in USD if we want those low fees.
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  #44  
Old 18.09.2013, 20:48
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Re: Low cost Investment Funds in Switzerland

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I guess we will have to learn to deal with the currency risk and trade in USD if we want those low fees.
If your buying the same thing the currency risk is identical, just the valuation currency is different.
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  #45  
Old 18.09.2013, 21:49
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Re: Low cost Investment Funds in Switzerland

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I agree with you. But Postfinance looks bad even for non-intensive trading. We can take the following example:
We want to invest 100000 in 5 ETFs 20000 each to diversify. Each year we will sell 2 ETFs and buy another 2. (lets assume that all the ETFs remain constant in value over the years. I know this is a stupid asumption but it works for calculating costs). Then

Postfinance

5 * 70 (buying cost) + 0 (maintenance fee) = 350 (first year).
4 * 70 (two buys and two sells) + 0 (maintenance year) = 280 (2nd year and after)

Swissquote

5 * 9 (buying cost) + 100 (0.025% * 10000 quarterly maintenance fee) = 145 (first year).
4 * 9 (two buys and two sells) + 100 (maintenance year) = 136 (2nd year and after)


So Swissquote looks much better even for this low level of trading.

If somebody spots a mistake in the calculation please say it!

By the way, anybody has any experience with swissquote?
but what about year 10? what if you buy and don't sell? what if you invest 1m?

are there any options with low costs and now maintenance fees? losing 1% each year is not really fun.
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  #46  
Old 18.09.2013, 22:31
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Re: Low cost Investment Funds in Switzerland

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what if you invest 1m?
You will have more negotiating power on your fees but that will very much depend on your skills.
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  #47  
Old 18.09.2013, 23:30
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Re: Low cost Investment Funds in Switzerland

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You will have more negotiating power on your fees but that will very much depend on your skills.
1 million is chicken feed in ch, reduced fees come with each transaction in the millions.
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  #48  
Old 19.09.2013, 00:35
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Re: Low cost Investment Funds in Switzerland

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1 million is chicken feed in ch, reduced fees come with each transaction in the millions.
ok. in that case, what if you invest 1bn? that 1% will start to get rather big compared to the 35chfs.
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  #49  
Old 19.09.2013, 00:51
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Re: Low cost Investment Funds in Switzerland

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ok. in that case, what if you invest 1bn? that 1% will start to get rather big compared to the 35chfs.
You won't do a big trade in ch for 35 chf......
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  #50  
Old 19.09.2013, 00:52
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Re: Low cost Investment Funds in Switzerland

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You won't do a big trade in ch for 35 chf......
ok, then the largest trade that you can do for < 1% annual fees :P
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  #51  
Old 19.09.2013, 01:52
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Re: Low cost Investment Funds in Switzerland

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ok, then the largest trade that you can do for < 1% annual fees :P
With Swiss post it's under 5k iirc for 35 CHF .
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  #52  
Old 19.09.2013, 08:42
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Re: Low cost Investment Funds in Switzerland

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Zero assuming your not American or a US person.
The rules are the same.........
Is this correct? You are talking about capital gains I guess. I think the US withholds 15% of dividends (and actually withhold 30% if you don't apply some double taxation convention).
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  #53  
Old 19.09.2013, 12:16
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Re: Low cost Investment Funds in Switzerland

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Is this correct? You are talking about capital gains I guess. I think the US withholds 15% of dividends (and actually withhold 30% if you don't apply some double taxation convention).
Yes, I am talking about capital gains.
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  #54  
Old 09.10.2013, 00:23
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Re: Low cost Investment Funds in Switzerland

Can anyone comment on US estate tax and how it affects Swiss investors using US brokers?
http://www.schwab-global.com/public/..._to_Non-US.pdf
Thanks
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  #55  
Old 10.10.2014, 17:28
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Re: Low cost Investment Funds in Switzerland

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There is no income, that is the point!
Hi everyone, long time follower of the forum but new to posting.
I've read all the information from the related investment funds' threads and have found it great but still have some unanswered questions.

Sorry, if I'm partially hijacking the threat, but it's several questions related to what has been said on this and similar threads by other members.

My first question relates to taxation on the capital gain of accumulating funds. As accumulating funds do not pay out but rather reinvest any dividends, what has to be declared on your tax form and what part of that will ACTUALLY be taxed.
Some members say that as there is no "profit" for that year, there is not tax to be paid, however I keep reading on government tax documents that the "dividend profit" has to be declared and will be taxed annually. What's correct here?

And my second question is: once payment is collected from that acc. fund say after 5 years how would the capital gain be taxed?
As capital gain (thus no tax) or as income (thus falling under normal income bracket taxation)?

Really appreciate your answers on this.
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  #56  
Old 13.10.2014, 10:29
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Re: Low cost Investment Funds in Switzerland

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Hi everyone, long time follower of the forum but new to posting.
I've read all the information from the related investment funds' threads and have found it great but still have some unanswered questions.

Sorry, if I'm partially hijacking the threat, but it's several questions related to what has been said on this and similar threads by other members.

My first question relates to taxation on the capital gain of accumulating funds. As accumulating funds do not pay out but rather reinvest any dividends, what has to be declared on your tax form and what part of that will ACTUALLY be taxed.
Some members say that as there is no "profit" for that year, there is not tax to be paid, however I keep reading on government tax documents that the "dividend profit" has to be declared and will be taxed annually. What's correct here?

And my second question is: once payment is collected from that acc. fund say after 5 years how would the capital gain be taxed?
As capital gain (thus no tax) or as income (thus falling under normal income bracket taxation)?

Really appreciate your answers on this.
This is my understanding of how it works, with the standard caveat that I'm not a tax lawyer, you have to make your own decisions etc.

For your first question it's not actually a given that an accumulating fund will be earning and reinvesting dividends in the way you might expect. For example with a fund structured like this I wouldn't declare anything as income, and even if I wanted to it would be impossible to work out what to declare. In my view with a fund like this there is no income to be taxed:

http://www.dbxtrackers.com/EN/binaer...?BinaerNr=1068

For your second question that's definitely a capital gain and not a 'payment'. You bought something at 100 and sold it at 200, and so there is no tax to pay under the Swiss system. It doesn't matter if you withdraw that 200 from your broker account and spend it. It's still not income.
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  #57  
Old 13.10.2014, 11:55
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Re: Low cost Investment Funds in Switzerland

Thanks for the explanation and reference Steve77.
So if my understanding is correct following your answer, that means that any capital gain made will be subjected to no taxation in Switzerland.

What about the 35% withholding tax?
My understanding regarding this is that it will always be levied on any earnings (including the capital gain) however it will be fully deductible once declared to the tax authorities.

According to the KPMG quote below sounds like only the Swiss-sourced dividends will be withholding taxed, but not foreign sourced.
Does that sound correct?


To illustrate a scenario which I have in mind:
Investment fund domiciled in Luxembourg/Ireland is listed as "withholding tax: no".
Does that mean that Luxembourg/Ireland do not withhold tax but you are exposed to the 35% Switzerland withholding tax i.e. you don't get double taxed. Or does it mean that there is no withholding tax whatsoever, meaning you get the full dividend amount without any deductions?

If that sounds confusing let me know and I will provide another example.


Thanks again for the big help!


Quoting KPMG below:

*Dividends and interest from domestic and foreign-sources are included in taxable income for the purposes of federal, cantonal, and municipal taxes. Swiss-sourced investment income, such as bank and bond interest, dividends, and investment fund distributions, is generally subject to a 35 percent withholding tax, which is creditable in full against Swiss (federal, cantonal, and municipal) tax on income and wealth due from a Swiss resident.* [http://www.kpmg.com/Global/en/Issues...me-tax.aspx#10]
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  #58  
Old 13.10.2014, 12:46
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Re: Low cost Investment Funds in Switzerland

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Thanks for the explanation and reference Steve77.
So if my understanding is correct following your answer, that means that any capital gain made will be subjected to no taxation in Switzerland.

What about the 35% withholding tax?
My understanding regarding this is that it will always be levied on any earnings (including the capital gain) however it will be fully deductible once declared to the tax authorities.

According to the KPMG quote below sounds like only the Swiss-sourced dividends will be withholding taxed, but not foreign sourced.
Does that sound correct?


To illustrate a scenario which I have in mind:
Investment fund domiciled in Luxembourg/Ireland is listed as "withholding tax: no".
Does that mean that Luxembourg/Ireland do not withhold tax but you are exposed to the 35% Switzerland withholding tax i.e. you don't get double taxed. Or does it mean that there is no withholding tax whatsoever, meaning you get the full dividend amount without any deductions?

If that sounds confusing let me know and I will provide another example.


Thanks again for the big help!


Quoting KPMG below:

*Dividends and interest from domestic and foreign-sources are included in taxable income for the purposes of federal, cantonal, and municipal taxes. Swiss-sourced investment income, such as bank and bond interest, dividends, and investment fund distributions, is generally subject to a 35 percent withholding tax, which is creditable in full against Swiss (federal, cantonal, and municipal) tax on income and wealth due from a Swiss resident.* [http://www.kpmg.com/Global/en/Issues...me-tax.aspx#10]
I don't know on why you wish to be so complicated......

US dividends will have withholding tax at 35% if held in a Swiss Broker, 15% if held by a U.S. Broker. Uk dividends will have a withholding tax of 35% if held by a Swiss Broker, however if they are held as ADR's by a U.S. Broker the rate is 0%

Buy a fund that does not pay out dividends and you pay zero .

Last edited by fatmanfilms; 13.10.2014 at 12:58. Reason: spelling
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  #59  
Old 14.10.2014, 14:14
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Re: Low cost Investment Funds in Switzerland

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What about the 35% withholding tax?
My understanding regarding this is that it will always be levied on any earnings (including the capital gain) however it will be fully deductible once declared to the tax authorities.
The withholding tax isn't levied on a capital gain. Capital gains and earnings/dividends are very different and are treated completely differently for tax purposes.

If you buy some shares in an ETF or a company that doesn't pay a dividend (e.g. Facebook) at CHF 10,000 and sell at CHF 20,000 then a Swiss broker (or any other broker as far as I know) will not withhold anything and you won't have to pay any taxes on it (other than the Swiss wealth tax, and the stamp duty when you buy and sell it). However, if you buy CHF 10,000 of shares in Shell which pay a 5% dividend then you will have to pay 20%-30% of the CHF 500 dividend you earn each year as if it was your salary or any other earnings.
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Old 14.10.2014, 14:25
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Re: Low cost Investment Funds in Switzerland

Thank you for the replies.
They've been extremely helpful and have cleared things up for me.
Cheers!
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