Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation  
Reply
 
Thread Tools Display Modes
  #1  
Old 24.03.2014, 22:41
Junior Member
 
Join Date: Mar 2010
Location: Vaud
Posts: 30
Groaned at 0 Times in 0 Posts
Thanked 5 Times in 1 Post
belgian beer lover has no particular reputation at present
Interactive brokers withholding tax

I'm considering to open an account at IB. Only one final question remains: what is the withholding tax situation? I want to avoid to pay tax on dividends twice.

I'm a Belgian citizen, living in Switzerland (Vaud).

I have contacted IB for this, and got the following response:

Quote:
Information relating to tax obligations is reported as required to the tax authorities within your country of residence as well as other countries if trading products subject to any local withholding requirements.

Unless specifically directed by a taxing authority, IB does not withhold taxes on proceeds from security sales.

We are required by US tax law, for example, to withhold US taxes on dividends paid by US corporations to foreign persons at a rate of 30%. This rate may be lower if the US has entered into a tax treaty with your country. In addition, investment interest income is not subject to US withholding.

Currently for Switzerland, this treaty rate is 30% for ordinary dividend income issued from US Corporations.

All withholdings for non-US persons and most entities will be reported on Form 1042-S at the close of each year. For further information refer to IRS publication 901 and/or your tax advisor.
What does this really mean?
* IB will always provide tax information to CH, so better make sure that my tax sheets are filed correctly?
* IB will not withhold any taxes on dividends, except for US corporations. I will need to pay tax on them in CH?
* dividends of US corporations will be tax withheld by IB, do I need to pay yet again tax in CH then? Does the US and CH have a tax treaty?

My current situation with my broker in Belgium is that I am not taxed at all on any dividends. It's up to me to declare the income of dividends in CH.
Reply With Quote
  #2  
Old 29.04.2014, 12:23
Newbie 1st class
 
Join Date: Apr 2014
Location: Jura
Posts: 29
Groaned at 0 Times in 0 Posts
Thanked 8 Times in 4 Posts
domino65 has no particular reputation at present
Re: Interactive brokers withholding tax

Hello belgian beer lover,

Did you get more information regarding your withholding taxes
issue ?

I am asking similar questions in the thread: Low Cost Broker with no Regular/Custody Fees

It looks like no one in Switzerland is using IB for dividend investing
Reply With Quote
  #3  
Old 13.09.2014, 16:16
Newbie 1st class
 
Join Date: Dec 2013
Location: zurich
Posts: 14
Groaned at 0 Times in 0 Posts
Thanked 5 Times in 2 Posts
randomSpaniard has no particular reputation at present
Re: Interactive brokers withholding tax

Hi, did you guys figure this one out?

I understand it from the above that, in principle, no taxes are applicable.
Reply With Quote
  #4  
Old 13.09.2014, 21:17
Jim2007's Avatar
Forum Legend
 
Join Date: Jun 2006
Location: Kt. Bern
Posts: 4,222
Groaned at 200 Times in 157 Posts
Thanked 6,746 Times in 3,035 Posts
Jim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond repute
Re: Interactive brokers withholding tax

Quote:
View Post
I understand it from the above that, in principle, no taxes are applicable.
Of course tax is applicable! Dividends are income and you are required to include them on your tax return assuming you are required to submit a tax return.
Reply With Quote
This user would like to thank Jim2007 for this useful post:
  #5  
Old 16.09.2014, 09:46
Fi_ZH's Avatar
Newbie 1st class
 
Join Date: Sep 2009
Location: Zurich
Posts: 11
Groaned at 0 Times in 0 Posts
Thanked 7 Times in 4 Posts
Fi_ZH has no particular reputation at present
Re: Interactive brokers withholding tax

Quote:
View Post
Of course tax is applicable! Dividends are income and you are required to include them on your tax return assuming you are required to submit a tax return.
Completely right, there's no way round it. Like death 😉
Reply With Quote
  #6  
Old 20.10.2014, 16:02
kiwiguy08's Avatar
Forum Veteran
 
Join Date: Apr 2008
Location: Horgen
Posts: 1,276
Groaned at 26 Times in 19 Posts
Thanked 901 Times in 442 Posts
kiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputation
Re: Interactive brokers withholding tax

I have a question on this topic and general taxation of dividends in Switzerland.

I will receive the total of about $1000 in dividends from various US companies that I have in my IB account. IB is not withholding US taxes from me. (Im a US citizen)

I plan to declare these dividends here and pay taxes on them next year....my questions are:

1) Does the tax I pay on these dividends get credited to the tax owed in the USA? Even if I file a FEIE for my earned income?

2) Do dividends get taxed at your normal income rate here or is there a lowered tax rate for them in Switzerland? In the USA I would pay 15% tax on qualified dividends and here my ordinary tax rate is about 20-22%

I would be very helpful to whoever can help me here...I have searched this topic on the zurich tax website and have only found references to the much more familiar case of people being taxed at source in the USA and looking to get the money back.
Reply With Quote
  #7  
Old 02.01.2016, 13:38
Newbie 1st class
 
Join Date: Jul 2015
Location: zurich
Posts: 29
Groaned at 0 Times in 0 Posts
Thanked 2 Times in 2 Posts
taurus85 has no particular reputation at present
Re: Interactive brokers withholding tax

Quote:
View Post
Of course tax is applicable! Dividends are income and you are required to include them on your tax return assuming you are required to submit a tax return.
So if you earn less than 120k and you don't need to do a tax return you are allowed not to declare dividends. Right?
Reply With Quote
  #8  
Old 02.01.2016, 13:52
Mullhollander's Avatar
Forum Legend
 
Join Date: Dec 2012
Location: Aargau
Posts: 2,553
Groaned at 10 Times in 9 Posts
Thanked 3,519 Times in 1,563 Posts
Mullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond repute
Re: Interactive brokers withholding tax

Quote:
View Post
So if you earn less than 120k and you don't need to do a tax return you are allowed not to declare dividends. Right?
This is what the Ct. Zurich tax office has to say about supplemental income in addition to source-taxed earned income:
"13. What does a supplementary withholding tax assessment mean? Persons liable for withholding tax who are domiciled in Switzerland or in the Canton of Zurich respectively for tax purposes shall be assessed in respect of their income that is not subject to withholding tax (e.g. earnings from self-employed part-time working, pensions, earnings from moveable assets and real estate in Switzerland and abroad, support contributions etc.), as well as for their assets within the context of the ordinary procedure. In this supplementary ordinary assessment procedure, the income that is subject to withholding tax shall be taken into account when determining the applicable rate. If necessary, the person who is liable for withholding tax must submit a tax return to the municipal tax office of his place of residence. If withholding tax that has been imposed upon securities earnings is to be reimbursed, a schedule of securities must in every case be submitted to the municipal tax office of the person who is subject to withholding tax. "

http://www.steueramt.zh.ch/dam/finan...t_qst15_en.pdf
Reply With Quote
This user would like to thank Mullhollander for this useful post:
  #9  
Old 26.09.2016, 00:33
Junior Member
 
Join Date: Mar 2010
Location: Vaud
Posts: 30
Groaned at 0 Times in 0 Posts
Thanked 5 Times in 1 Post
belgian beer lover has no particular reputation at present
Re: Interactive brokers withholding tax

Hi all,

This question is still unresolved. How should I arrange to correctly file dividends in CH (and obviously then be taxed on them), but avoid that I am taxed 15% in the US, and then on top of it also be taxed again in CH?

If I must pay (say) 20% tax, because it is considered as income tax, I can live with that. At least, if that means I don't need to pay the 15% US tax. I don't want to pay 35% tax...
Reply With Quote
  #10  
Old 26.09.2016, 10:20
Meadow's Avatar
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: Interactive brokers withholding tax

Two and a half years and no direct answer . I've been asking this question as well and even paid a visit to the Steueramt, but nobody could tell me how it works.
Reply With Quote
  #11  
Old 26.09.2016, 10:47
kiwiguy08's Avatar
Forum Veteran
 
Join Date: Apr 2008
Location: Horgen
Posts: 1,276
Groaned at 26 Times in 19 Posts
Thanked 901 Times in 442 Posts
kiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputation
Re: Interactive brokers withholding tax

Quote:
View Post
Hi all,

This question is still unresolved. How should I arrange to correctly file dividends in CH (and obviously then be taxed on them), but avoid that I am taxed 15% in the US, and then on top of it also be taxed again in CH?

If I must pay (say) 20% tax, because it is considered as income tax, I can live with that. At least, if that means I don't need to pay the 15% US tax. I don't want to pay 35% tax...

It really should not be complicated. You list the dividends on your swiss tax return under investment income. They get taxed at normal income tax rates in Switzerland. You are then able to credit this amount paid to your outstanding us tax obligation. Typically, the swiss tax is higher than the US tax on dividends so you pay no taxes to uncle sam.

I've never had to do this for the US though, my personal deduction and exemptions still exceed my dividend income. Thus I wouldn't even begin to know how to list in on the US return
Reply With Quote
The following 2 users would like to thank kiwiguy08 for this useful post:
  #12  
Old 26.09.2016, 10:53
Meadow's Avatar
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: Interactive brokers withholding tax

And what if I buy UBS SPI, a Swiss-domiciled ETF? Is there a withholding tax on that?

What if I buy some Vanguard or iShares ETF, domiciled in Ireland? They hold stocks from around the World, not only USA. What is the tax rate, at which Point is it levied, is there a way to get it back?
Reply With Quote
  #13  
Old 26.09.2016, 11:08
NotAllThere's Avatar
Forum Legend
 
Join Date: Oct 2008
Location: Baselland
Posts: 12,714
Groaned at 202 Times in 179 Posts
Thanked 18,352 Times in 7,490 Posts
NotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond repute
Re: Interactive brokers withholding tax

Quote:
View Post
It really should not be complicated. You list the dividends on your swiss tax return under investment income. They get taxed at normal income tax rates in Switzerland...
I'm British citizen, permanently resident in CH. I own US, GB and CH shares.

My understanding is that any tax withheld, is offset against my CH tax bill, under dual taxation rules.
Reply With Quote
  #14  
Old 26.09.2016, 11:16
kiwiguy08's Avatar
Forum Veteran
 
Join Date: Apr 2008
Location: Horgen
Posts: 1,276
Groaned at 26 Times in 19 Posts
Thanked 901 Times in 442 Posts
kiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputation
Re: Interactive brokers withholding tax

Quote:
View Post
And what if I buy UBS SPI, a Swiss-domiciled ETF? Is there a withholding tax on that?

What if I buy some Vanguard or iShares ETF, domiciled in Ireland? They hold stocks from around the World, not only USA. What is the tax rate, at which Point is it levied, is there a way to get it back?
It doesn't matter, as long as the US has a tax treaty with the country where the shares are being offered you can claim a tax credit.

If you are investing in Iran's "Ayatollahshares Tehran 100 Index", you might have a problem

Regarding withholding tax, I try to sty away from countries that have withholding taxes on dividends.

It's too much a time and energy sink to do it. (unless dealing with very significant sums of money) Otherwise, why gumm up your tax returns with countless additional pages
Reply With Quote
  #15  
Old 26.09.2016, 12:09
Meadow's Avatar
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: Interactive brokers withholding tax

Quote:
View Post
It doesn't matter, as long as the US has a tax treaty with the country where the shares are being offered you can claim a tax credit.

If you are investing in Iran's "Ayatollahshares Tehran 100 Index", you might have a problem

Regarding withholding tax, I try to sty away from countries that have withholding taxes on dividends.

It's too much a time and energy sink to do it. (unless dealing with very significant sums of money) Otherwise, why gumm up your tax returns with countless additional pages
Ok, but what with a simple case of Holding NESN (Nestle) shares? The are Swiss domiciled, I am also Swiss domiciled. They pay out each year 3% dividend. Let's say I hold 100 000 CHF worth of NESN, that means a dividend of 3000 CHF. Will the tax Office take away 35%? Can I reclaim it? Do I have to declare it as income? Is the answer to any of These questions depending on if I pay the Quellensteuer?
Reply With Quote
  #16  
Old 26.09.2016, 15:10
kiwiguy08's Avatar
Forum Veteran
 
Join Date: Apr 2008
Location: Horgen
Posts: 1,276
Groaned at 26 Times in 19 Posts
Thanked 901 Times in 442 Posts
kiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputation
Re: Interactive brokers withholding tax

Quote:
View Post
Ok, but what with a simple case of Holding NESN (Nestle) shares? The are Swiss domiciled, I am also Swiss domiciled. They pay out each year 3% dividend. Let's say I hold 100 000 CHF worth of NESN, that means a dividend of 3000 CHF. Will the tax Office take away 35%? Can I reclaim it? Do I have to declare it as income? Is the answer to any of These questions depending on if I pay the Quellensteuer?
For Switzerland....

Yes Nestle will take a 35% withholding tax.

If you are filling in a Swiss tax return, you will state on your tax return how much in Nestle shares you have, how much dividend income you made and how much tax was withheld. Then the tax already paid will be deducted from your overall taxes due. (1-1) Its very straightforward.

For quellensteuer, it gets complicated. Theoretically, your quellensteuer and your dividend witholding taxes settle your bill with the tax authorities. There are no tax forms to fill out and you are done. Maybe you paid more in withholding taxes than you actually should have but thats the name of the game. On the other hand, your 100k Nestle fortune is not subject to wealth tax. You also live in Zurich city based on profile, so your quellensteuer is actually likely less than you would pay if you you did a tax return
Reply With Quote
The following 3 users would like to thank kiwiguy08 for this useful post:
  #17  
Old 26.09.2016, 15:39
Meadow's Avatar
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: Interactive brokers withholding tax

Quote:
View Post
For Switzerland....

Yes Nestle will take a 35% withholding tax.

If you are filling in a Swiss tax return, you will state on your tax return how much in Nestle shares you have, how much dividend income you made and how much tax was withheld. Then the tax already paid will be deducted from your overall taxes due. (1-1) Its very straightforward.
Thanks a lot, that's the kind of clarification I needed. What remains a mystery, is how a multi-country ETF domiciled abroad deals with withholding tax. In this case we have three countries involved:
  • domicile of the investor (Switzerland)
  • domicile of the fund (Ireland)
  • domicile of the stock (US, Germany, Japan, China, etc.)

Quote:
View Post
For quellensteuer, it gets complicated. Theoretically, your quellensteuer and your dividend witholding taxes settle your bill with the tax authorities. There are no tax forms to fill out and you are done. Maybe you paid more in withholding taxes than you actually should have but thats the name of the game. On the other hand, your 100k Nestle fortune is not subject to wealth tax. You also live in Zurich city based on profile, so your quellensteuer is actually likely less than you would pay if you you did a tax return
Yes, that's all true. Fair enough. I wonder though, what happens if I start earning over 120 000 in the near future? I will be required to submit a tax declaration. Will I be able to deduct the dividend tax then? I do live in Zurich, but if that day comes, I will consider moving to some place with lower Steuerfuss, like Küsnacht, Kilchberg or Thalwil.
Reply With Quote
This user would like to thank Meadow for this useful post:
  #18  
Old 26.09.2016, 16:47
kiwiguy08's Avatar
Forum Veteran
 
Join Date: Apr 2008
Location: Horgen
Posts: 1,276
Groaned at 26 Times in 19 Posts
Thanked 901 Times in 442 Posts
kiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputationkiwiguy08 has an excellent reputation
Re: Interactive brokers withholding tax

Quote:
View Post
Thanks a lot, that's the kind of clarification I needed. What remains a mystery, is how a multi-country ETF domiciled abroad deals with withholding tax. In this case we have three countries involved:
  • domicile of the investor (Switzerland)
  • domicile of the fund (Ireland)
  • domicile of the stock (US, Germany, Japan, China, etc.)



Yes, that's all true. Fair enough. I wonder though, what happens if I start earning over 120 000 in the near future? I will be required to submit a tax declaration. Will I be able to deduct the dividend tax then? I do live in Zurich, but if that day comes, I will consider moving to some place with lower Steuerfuss, like Küsnacht, Kilchberg or Thalwil.
yes you will be able to deduct the taxes then

I'mnot sure how you would find out how much tax was withheld by which country in an ETF. I would just put down the total tax withheld on the form
Reply With Quote
  #19  
Old 26.09.2016, 17:42
Meadow's Avatar
Senior Member
 
Join Date: Jul 2016
Location: Zurich
Posts: 272
Groaned at 6 Times in 5 Posts
Thanked 95 Times in 63 Posts
Meadow has no particular reputation at present
Re: Interactive brokers withholding tax

Quote:
View Post
yes you will be able to deduct the taxes then

I'mnot sure how you would find out how much tax was withheld by which country in an ETF. I would just put down the total tax withheld on the form
Are you sure? That would make sense if Switzerland was the only country levying that tax. What if the tax is levied in Ireland or USA?
Reply With Quote
  #20  
Old 26.09.2016, 21:42
Junior Member
 
Join Date: Jun 2014
Location: Zug
Posts: 90
Groaned at 22 Times in 17 Posts
Thanked 491 Times in 262 Posts
NomadAmericano is considered knowledgeableNomadAmericano is considered knowledgeableNomadAmericano is considered knowledgeable
Re: Interactive brokers withholding tax

Quote:
View Post
Are you sure? That would make sense if Switzerland was the only country levying that tax. What if the tax is levied in Ireland or USA?
You then have the option of requesting a tax refund from the IRS if tax was withheld at source for US-source income, based on the relevant US-Swiss tax treaty, or you follow the suggestions above re disclosing the withholding to the Swiss tax authorities and using it as an off-set.
Reply With Quote
Reply

Tags
interactive brokers, tax, withholding tax




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Interactive brokers in Switzerland ipsiety Business & entrepreneur 424 16.01.2021 21:05
FBAR / FATCA - Interactive Brokers? Village Idiot Finance/banking/taxation 7 23.06.2015 16:55
CIM Banque (Interactive Brokers) - anyone? Leo+ Finance/banking/taxation 2 28.05.2013 06:19
Interactive Brokers - Opening an Account/Transfering Funds/Dividend Taxes Metallising Finance/banking/taxation 11 11.07.2011 03:41
Tax issues - Withholding tax; advance tax; taxed pro-rata; and moving cantons Butimi Finance/banking/taxation 8 26.07.2008 19:42


All times are GMT +2. The time now is 12:56.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2021, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0