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Old 17.04.2017, 21:55
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US-ETF withholding tax

I'm trying to report my Swiss tax return and not quite sure how to declare my US ETF.

Let's say my ETF is worth 10,000 USD and it generates 1,000 USD dividends, 15% of it was held as withholding tax for foreigners. In my 1042-S form, it usually lists

2) Gross income: 1,000
10) Total withholding credit: 150

So in my Swiss tax return form, I should put that 10,000 USD as taxable assets to calculate my wealth tax, but what about the dividends? Should I use 1,000 USD as my securities dividend income, or 1000-150 = 850? How do I avoid double taxing in this case?
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Old 17.04.2017, 21:57
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Re: US-ETF withholding tax

No idea but when I enter the ISIN into the tax return, add what bought when etc and why, the online tool automatically calculates whatever is necessary
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Old 17.04.2017, 23:22
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Re: US-ETF withholding tax

1000 USD in your example is taxable income in Switzerland. You can get 150 USD back by filing DA-1
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Old 20.04.2017, 21:21
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Re: US-ETF withholding tax

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1000 USD in your example is taxable income in Switzerland. You can get 150 USD back by filing DA-1
Do you mean that Swiss tax authority will help me get the withholding tax back and wire it to my bank account in Switzerland if I fill out DA-1 properly?

Does it work for all ETF or just certain kinds of ETF?
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Old 20.04.2017, 22:38
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Re: US-ETF withholding tax

Well, basic things are explained directly on the instructions to the form. They'll either wire you or deduct it from final tax bill eventually. Only the countries with which Switzerland has an income tax treaty with avoidance of double taxation are eligible. Full list is on the instruction form, US is one of them. There are limits to how much you can request, minimum 50 Fr, maximum depends on your income.

Only the part of withholding taxes that you cannot request back directly from the source country is eligible to be reimbursed. For US and most countries it's 15%, here's an overview of the rates for a few countries. For US, fortunately, if you filed W8-BEN and use a Qualified Intermediary broker, 15% will also be your final withholding rate, so no other paperwork besides DA-1 is needed. However, if you use a swiss broker, they're obliged to withhold an additional 15% locally on top of US 15%, so called zusätzlicher Steuerrückbehalt, it's reclaimable with DA-1 as well. Just another reason to avoid already ultra expensive swiss brokers.

The part above 15% or whatever rate you can forget and have to cash in by yourself from the source country's tax authorities, which means more paperwork and costs (e.g. postage). I'm now trying to avoid such countries by buying their US listed ADR stocks, I'll learn how it goes in a few years...
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Old 13.07.2018, 17:23
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Re: US-ETF withholding tax

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However, if you use a swiss broker, they're obliged to withhold an additional 15% locally on top of US 15%, so called zusätzlicher Steuerrückbehalt, it's reclaimable with DA-1 as well. Just another reason to avoid already ultra expensive swiss brokers.
So do you use a US broker or one based in another country? Does that complicate things with respect to tax?

I was thinking of using a UK based broker/fund since there's a chance I move back, but a few I've looked at (like Vanguard Investor), say they only allow UK residents and UK tax payers. I could maybe pull of UK resident if I use my parents' address, but since I pay tax here I still wouldn't be allowed to open it.

Sorry if it's a dumb question and if I shouldn't have bumped the thread, but I'm kind of new to this and was trying to research it.
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Old 14.07.2018, 22:39
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Re: US-ETF withholding tax

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So do you use a US broker or one based in another country?
UK subsidiaries of US brokers.

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Does that complicate things with respect to tax?
Not at all, in fact it's simpler than with most swiss brokers as I just pay the minimum possible 15% withholding in most cases
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Old 14.07.2018, 23:10
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Re: US-ETF withholding tax

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UK subsidiaries of US brokers.


Not at all, in fact it's simpler than with most swiss brokers as I just pay the minimum possible 15% withholding in most cases
Right, here's another question I was wondering about actually. This withholding tax is only paid to the US right? So you pay 0% to the UK or Switzerland other than possibly stamp duties?

But in any case, would it be different if you had an accumulating ETF which rolled in the dividends into buying more shares (actually I heard that in the US they need to pay dividends by law but if we ignore that). Would that still count as dividend or capital gain?

If it still counts as dividend and you need to pay the dividend tax on it, how do they withhold it, and how do you determine exactly what percent of the accumulation was dividend? Do you get some sort of tax statement or info from your ETF provider?

By the way thanks for the help and the answer, I appreciate it. I just started researching into this and I feel a bit swamped with info.
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Old 14.07.2018, 23:22
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Re: US-ETF withholding tax

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This withholding tax is only paid to the US right?
If you're buying US stocks/ETFs

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So you pay 0% to the UK or Switzerland other than possibly stamp duties?
Why would I have to pay anything to UK? I have nothing to do with them, not even stamp duty when not buying UK stocks. The fact that my broker's there doesn't change anything. I pay my income taxes to Switzerland though as a good law abiding resident, including on all dividends received from abroad

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But in any case, would it be different if you had an accumulating ETF which rolled in the dividends into buying more shares
These reinvested dividends are taxable income in Switzerland and there are no accumulating american ETFs, they all have to distribute. With non-american funds you'll get double taxed on US holdings so I don't buy them

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If it still counts as dividend and you need to pay the dividend tax on it, how do they withhold it
The withholding is just for american taxes. For swiss taxes you're supposed to file tax declaration once a year and declare value of holdings and income received from them, they'll calculate how much you owe and bill you eventually. You can fully reclaim american 15% withholding thank to double taxation treaty.

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and how do you determine exactly what percent of the accumulation was dividend?
That's a very good question. Fortunately I don't care about the anwer as I don't buy such crap. For some funds you can look up the official assessment of what part of capital gain is taxable due to reinvestments on ictax. If there's no official assessment it's up to you to look through funds' reports and fish out some numbers or else they might choose to tax the whole thing as income.

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Do you get some sort of tax statement
No. You get a statement from the broker about the tax that got withhold though

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or info from your ETF provider?
Yes on their website, all of them (have to) publish quite a lot of info, most notably at least the yearly reports.
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Old 11.10.2018, 17:18
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Re: US-ETF withholding tax

Hi, I'm hijacking this topic to ask a question (it's also my first post here. Very useful forum with a lot of information thank you).

To decide between a US domiciled and a Irish domiciled ETF I thought I'd try out actually filling it in in the tax software (of Luzern in my case). When in the wertschift / position erfassen screen I look up the following US domicled ETF (Vanguard VT https://institutional.vanguard.com/V...?fundId=3141):

https://www.ictax.admin.ch/extern/en...27424/20171231

It automatically completes the "Rubrik" field to read "B- Ohne verrechnungsteuer" . If I try the same thing with a regular US dividend paying stock (e.g. Microsoft) it fills in the Rubrik field with "C - DA-1/R-US" and allows to fill in "DA-1 nicht ruckforderbar". This amount is used further to calculate "Totale Pausch. anrechnung"

Anyway, the 15% withheld tax on Vanguard VT should be deductible as well with a DA-1 form as far as I'm aware. Am I doing something wrong or is the software faulty? (or am I wrong and is the witholding tax not deductable for some reason?)
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Old 13.10.2018, 10:37
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Re: US-ETF withholding tax

Probably the software, I had no problems claiming the withholding tax back from ZH. Why don't you write to your Steueramt?
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Old 13.10.2018, 12:06
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Re: US-ETF withholding tax

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Probably the software, I had no problems claiming the withholding tax back from ZH. Why don't you write to your Steueramt?
Thanks for the reply

I don't live there (yet), just doing some research how it all works (and double checking all my assumptions are correct in the process). I thought I might be doing something wrong cause all the normal foreign companies work while none of the foreign domiciled funds that I tried do (and I can't be the first one to try this for the whole Canton).

How would this normally work if you approach the Steueramt?

BTW, not everything is present in the course listing (https://www.ictax.admin.ch/extern/en.html#/search). For example https://investor.vanguard.com/etf/profile/VYMI cannot be found (and of course no foreign OTC stocks can be found either). How would you go add these in the "wertschriften und guthaben" overview? "Ubrige guthaben"
or something?
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Old 13.10.2018, 12:20
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Re: US-ETF withholding tax

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How would this normally work if you approach the Steueramt?
Email them, usually they are quite friendly and approachable people

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n the course listing (https://www.ictax.admin.ch/extern/en.html#/search). For example https://investor.vanguard.com/etf/profile/VYMI cannot be found (and of course no foreign OTC stocks can be found either). How would you go add these in the "wertschriften und guthaben" overview? "Ubrige guthaben"
or something?
As stock and type dividend info manually.
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Old 13.10.2018, 12:48
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Re: US-ETF withholding tax

Thanks for your help!
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Old 28.07.2020, 11:39
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Re: US-ETF withholding tax

Hi, I am trying to understand how to get back the 15% withholding tax on US-ETFs. However, I found this information below which I don't really understand.


Does it mean that international civil servants cannot claim back the 15% tax?


I would really be grateful if someone could confirm this to me. Thank you!



--------------



https://www.ge.ch/declarer-revenus-c...evenu-etranger
Si vous êtes fonctionnaire international de nationalité étrangère (au bénéfice d'une exonération sur le revenu immobilier)

Aucune imputation ne peut vous être restituée car vous n'êtes pas imposé sur ces revenus.
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