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Old 29.09.2016, 16:29
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Interactive Brokers account

Hi,

I was wondering if it's possible to open an IB account while being on a B permit.

I wanted to invest some of my savings, and also to use it to convert currencies with better exchange rates.

Plus they're quite cheap compared to the other swiss brokers, and since they have offices everywhere it will be easier if I'll ever move away from CH.
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Old 29.09.2016, 17:53
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Re: Interactive Brokers account

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I was wondering if it's possible to open an IB account while being on a B permit.
Yes, it's possible. Even on L. No problem, why would they care? You'll be dealing with a UK company formally. The office in Zug does just tech support.
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Old 29.09.2016, 18:18
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Re: Interactive Brokers account

because maybe they will not accept Swiss addresses?
If they do, that's great!
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Old 29.09.2016, 18:28
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Re: Interactive Brokers account

They do. I opened my account on the UK site with no problem.
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Old 29.09.2016, 18:29
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Re: Interactive Brokers account

They very much welcome Swiss customers.

I doubt they care about your permit type besides the fact that you have one and is a resident here.
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Old 29.09.2016, 22:36
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Re: Interactive Brokers account

great, and they don't withhold any tax right? a part for US dividends from my understanding.
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Old 29.09.2016, 22:53
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Re: Interactive Brokers account

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great, and they don't withhold any tax right? a part for US dividends from my understanding.
They do withhold
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Old 29.09.2016, 22:59
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Re: Interactive Brokers account

How does that work?
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Old 29.09.2016, 23:57
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Re: Interactive Brokers account

Depending on the country of the security, its tax legislation and treaties with Switzerland, stock broker may be obliged to withhold certain percentage of dividend income from you.

Easy case: Swiss security. Witholding rate is always 35% and you claim the witholding tax back on your tax return by listing the the dividend income in Werte mit Verrechnungssteuerabzug column of Wertschriftenverzeichnis.

Difficult case: foreign securities. Check applicable tax treaties, talk to a tax consultant, fill DA-1 form to claim some of it back, or forget about it...
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Old 30.09.2016, 00:00
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Re: Interactive Brokers account

Thanks, that's clear enough.
Easy solution out could be to avoid companies that redistribute dividends
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Old 30.09.2016, 00:09
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Re: Interactive Brokers account

Yeah, but be careful with funds that receive dividends from their holdings and reinvest them instead of paying out. Tax authorities crack down on these funds by studying their financial reports and try to tax you on these reinvested dividends! To minimize surprises, check the official Kursliste to learn how particular fund was hit by these hidden taxes in the past before deciding to buy it.
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Old 30.09.2016, 01:09
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Re: Interactive Brokers account

interesting, I'll try to get something that doesn't have dividends at all. Not too easy if they go picking on single stocks that are part of the ETFs as well.
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Old 04.11.2016, 19:40
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Re: Interactive Brokers account

Hi All,

i'm bumping this thread since i have few doubts on the transfer from a Swiss bank to IB.

I have opened a IB account with CHF as base currency.
If I want to do a transfer, IB gives me a British iban (GB) and with UBS I have to pay the following:

1) 5cHF for International payment orders
2) the UBS currency exchange rip-off rate

Is there a way to minimize the two?
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Old 04.11.2016, 19:48
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Re: Interactive Brokers account

You should specify to IB which currency you want to send and they'll give you a corresponding bank account number for it.

They do support CHF inpayments. If I remember correctly they have a Citibank GB account for it. The location of account in GB does not imply it's GBP denominated, so you shouldn't suffer conversion loss if everything is done correctly.

A fee for a CHF payment abroad is unavoidable, and there may be also arbitrary third-party fees added by the time the money arrives. The smallest such fee for a transfer to IB's bank among Swiss banks that I know of is 2 CHF and no third party charges (at Swissquote), so that's roughly the minimum I guess.

Usually it's only SEPA payments (EUR-denominated) that are free of charge at most Swiss banks for payments abroad, so if you have EURs, you can transfer them to IB for free.

Last edited by ivank; 04.11.2016 at 20:03.
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Old 04.11.2016, 20:18
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Re: Interactive Brokers account

Thanks!
They gave me a citibank account, but the iban starts with GB.
Hence UBS automatically transfer the money from CHf to GBP, and then swissquote will have to transfer back from gBP to CHF.

From your experience, does IB have an account starting with CH..?
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Old 04.11.2016, 20:38
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Re: Interactive Brokers account

The prefix in IBAN number designates only the country, not currency.

If you have further doubts, you should take it up with UBS support then to learn how to do CHF transfer abroad in their system.

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From your experience, does IB have an account starting with CH..?
Not for customer funds I think.

They do have a local subsidiary, so obvisouly they have some. Just not for you.
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Old 09.11.2016, 13:45
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Re: Interactive Brokers account

I use UBS to send CHF to IB and never have an issue on converting currency, it arrives in IB account as CHF. Using E-banking it normally asks if you want to do a currency conversion or send in your stated currency. If i recall correctly, the 5chf is the only cost.

FYI the IBAN that i get told to send it to is the following.
GB35CITI18500810569674
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Old 11.11.2016, 15:35
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Re: Interactive Brokers account

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Yeah, but be careful with funds that receive dividends from their holdings and reinvest them instead of paying out. Tax authorities crack down on these funds by studying their financial reports and try to tax you on these reinvested dividends! To minimize surprises, check the official Kursliste to learn how particular fund was hit by these hidden taxes in the past before deciding to buy it.
I checked the Kursliste for two ETFs:
  • IE00B5BMR087 - iShares Core S&P 500 UCITS ETF
  • IE00B3XXRP09 - Vanguard S&P 500 UCITS ETF
  • They are both based in Ireland
  • Both have full replication
  • iShares is accumulating, Vanguard is distributing
  • iShares has securities lending, which is potentially risky

Could you tell me how to interpret the results? Are both ETFs to be taxed? Does the accumulating one not shield from it?



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Old 11.11.2016, 15:53
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Re: Interactive Brokers account

Both are taxable, you can see the dates of "dividend" issue and taxable income in the table.
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Old 11.11.2016, 15:58
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Re: Interactive Brokers account

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Both are taxable, you can see the dates of "dividend" issue and taxable income in the table.
It's interesting, iShares does not distribute dividends, but on 31.07 there is a single entry to a total of about 2% of the share value. The Vanguard one has quarterly payments, also around 2% in total.

Could you tell me what is the difference between Bruttoertrag mit/ohne VSt? VSt means Verrechnungssteuer. Is this the withholding tax? Does it mean that both ETFs have no withholding tax?

And finally, can we put the advice for buying accumulating ETFs to sleep? Are there actually any examples where this works and there is no tax?
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