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Old 25.05.2017, 14:59
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Some Dividend related questions...

Hi guys!


I wanted to go back to the Stock market once I move to Switzerland, and I was wondering if there is some company / broker that lets you do automatically the Dividend Compounding for you...

The reason behind this, is that when I had stocks that paid dividends, the dividends paid in $$$ were getting double taxation (leaving you with pennies to reinvest, and you had to do it manually...), the companies didnt have any reinvestment plan, and the companies that paid the dividends in stocks were just a few... (I was trading on the NASDAQ and the NYSE).

As far as I know one of the advantages of buying/selling stocks in Switzerland was that were only once taxed the dividends that you get...
  • Is it true that you get taxed only once on your dividend incomes?
  • There is any company/broker that makes the reinvestment for you automatically?
  • Buying and selling stocks is cheaper in Switzerland?


Thanks guys!!!!
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  #2  
Old 25.05.2017, 16:10
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Re: Some Dividend related questions...



cheers
SC
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Old 25.05.2017, 18:03
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Re: Some Dividend related questions...

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The reason behind this, is that when I had stocks that paid dividends, the dividends paid in $$$ were getting double taxation
Why exactly would it be double taxed?

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Is it true that you get taxed only once on your dividend incomes?
Switzerland taxes worldwide income, so you're definitely going to get taxed by Switzerland if you live here. If stock is from a foreign country, most likely that country would also like a cut of your dividends. With most of the countries Switzerland has income tax treaty agreements to mitigate double taxation, which should mean that most of the time you'd pay in total to both sovereigns the higher of the two tax rates

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There is any company/broker that makes the reinvestment for you automatically?
Any accumulating fund/ETF.

But tax-wise they're not necessarily a good idea: reinvested dividends are still considered a taxable income in Switzerland, and because you're not a direct owner of those dividend-paying stocks, you don't get to claim a tax credit due to foreign withholding taxes. Consider a simple example: an Irish accumulating fund fully invested in US stock market. Dividend yield is about 2%, of which 15% are lost due to US withholding - this essentially adds 30bp to TER that the fact sheet will never tell you about. Owning a US-based distributing fund on the other hand would allow you to recover these US withholding taxes on your swiss tax return, the fund itself doesn't get taxed by the US, so nothing would be lost along the way.

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Buying and selling stocks is cheaper in Switzerland?
Hell no. Stick to NYSE and NASDAQ.
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Old 25.05.2017, 19:43
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Re: Some Dividend related questions...

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Why exactly would it be double taxed?
Because when I used to get the dividends from us, I was suppose (as example)
to get 100 usd "cash", but at the end, after taxes from US and Spain, plus other fees, I ended up getting around 35 usd, from the 100... which was terrible.

Didnt happen the same with the companies that "paid" their dividends with more stocks... , in that case I was just getting more stocks, and thats it

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Hell no. Stick to NYSE and NASDAQ.
Off course, US market for Stocks is (in my humble opinion) the best.
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Old 25.05.2017, 21:03
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Re: Some Dividend related questions...

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Because when I used to get the dividends from us, I was suppose (as example)
to get 100 usd "cash", but at the end, after taxes from US and Spain, plus other fees, I ended up getting around 35 usd, from the 100... which was terrible.
Sounds like you've been doing something wrong. As far as I can tell from a quick search, situation in Spain looks completely analogous to Switzerland.

US-Spain have an income tax treaty with clauses to prevent double taxation and reduced 15% tax rate. It seems you haven't took advantage of this facility properly when paying your Spain taxes, likely you didn't file necessary paperwork for it. It doesn't happen automatically in Switzerland either, there's a form (DA-1) you need to file alongside your tax return to get a credit for US withholding tax. Second, hold stocks through an IRS-recognized Qualified Intermediary broker and the US withholding rate should then be only 15% per treaty. For non-qualified brokers I suppose you need to get in touch with IRS the part above 15% back.
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Old 25.05.2017, 22:21
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Re: Some Dividend related questions...

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Sounds like you've been doing something wrong. As far as I can tell from a quick search, situation in Spain looks completely analogous to Switzerland.

US-Spain have an income tax treaty with clauses to prevent double taxation and reduced 15% tax rate. It seems you haven't took advantage of this facility properly when paying your Spain taxes, likely you didn't file necessary paperwork for it. It doesn't happen automatically in Switzerland either, there's a form (DA-1) you need to file alongside your tax return to get a credit for US withholding tax. Second, hold stocks through an IRS-recognized Qualified Intermediary broker and the US withholding rate should then be only 15% per treaty. For non-qualified brokers I suppose you need to get in touch with IRS the part above 15% back.
I finally found one of the recipts I got for some of the dividends...
https://gyazo.com/6e9bed0a0d77296cc28d330f900fd9d9
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Old 25.05.2017, 22:47
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Re: Some Dividend related questions...

39.600% for US withholding seems wrong, should be either 15% or 30% depending on broker status. What stock is that?

19% spanish withholding tax - well, you got double taxed here. US-Spain have income tax treaty with double taxation relief, talk to the bank or a tax consultant who knows spanish laws how to invoke it, what forms to file and where. In Switzerland the way to do it is to file DA-1 with your tax declaration, you'll get a credit for foreign non-reimbursable withholding taxes, 15% for US.

Bank fee and I.V.A. - totally avoidable, change to a broker who doesn't rip you off for processing dividend payments
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Old 26.05.2017, 00:49
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Re: Some Dividend related questions...

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39.600% for US withholding seems wrong, should be either 15% or 30% depending on broker status. What stock is that?

19% spanish withholding tax - well, you got double taxed here. US-Spain have income tax treaty with double taxation relief, talk to the bank or a tax consultant who knows spanish laws how to invoke it, what forms to file and where. In Switzerland the way to do it is to file DA-1 with your tax declaration, you'll get a credit for foreign non-reimbursable withholding taxes, 15% for US.

Bank fee and I.V.A. - totally avoidable, change to a broker who doesn't rip you off for processing dividend payments

Thanks Ivank!

Any good ones in Switzerland with an online platform to buy and sell stocks easy and with no troubles when getting the dividends?
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Old 26.05.2017, 00:58
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Re: Some Dividend related questions...

No, all swiss brokers will try to rip you off, avoid if possible

Best retail broker I know is Interactive Brokers, which is in UK/US
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Old 26.05.2017, 08:51
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Re: Some Dividend related questions...

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No, all swiss brokers will try to rip you off have high trading and account fees, and sometimes aren't very upfront about, avoid if possible

Best retail broker I know is Interactive Brokers, which is in UK/US
... a little more accurate, perhaps?
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Old 26.05.2017, 19:07
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Re: Some Dividend related questions...

You can also have a look at degiro.ch. They have 0.1 - 0.02 % FX fee , and free ETF opportunities.
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Old 26.05.2017, 21:07
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Re: Some Dividend related questions...

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You can also have a look at degiro.ch. They have 0.1 - 0.02 % FX fee , and free ETF opportunities.
How are they? Have you withdraw money from stocks that you sold, or dividends that you got?

I have heard that there were lots of problems with Plus 500 for example, and some others too as well at the time of getting back their cash, and that freaks me out! So far I was buying/selling stocks through my bank here in Spain
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Old 26.05.2017, 21:53
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Re: Some Dividend related questions...

IB is legit, I regularly withdraw money without problems, receive dividends, trades go through the exchanges, visible in exchange order books.

Avoid CFDs/binary options and brokers who heavily market them like plus500. These are not serious investment products and not traded on regulated exchanges. Your counterparty most of the time is the broker itself, not the market, which leads to conflict of interests and really disincentivizes the broker to provide a fair service. Needless to say, there are tons on scams with these products, they're even downright outlawed in US for retail public.

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You can also have a look at degiro.ch. They have 0.1 - 0.02 % FX fee , and free ETF opportunities.
It's a dutch broker, not swiss, don't let the domain name fool you. They have some small dividend fees, unless you agree to lend your shares to degiro for their profit.
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Old 27.05.2017, 02:21
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Re: Some Dividend related questions...

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IB is legit, I regularly withdraw money without problems, receive dividends, trades go through the exchanges, visible in exchange order books.
Which one is IB?
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Old 27.05.2017, 20:20
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Re: Some Dividend related questions...

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Which one is IB?
https://www.interactivebrokers.com/en/home.php
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Old 27.06.2017, 17:19
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Re: Some Dividend related questions...

Thanks Dr. Mick! Im taking a look at it now... Couldnt put a thumbs up before
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Old 28.06.2017, 15:50
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Re: Some Dividend related questions...

Is it legal to open a IB account if you live in Switzerland? So far I see for UK, India, Canada, etc... but not for Europe
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Old 28.06.2017, 16:09
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Re: Some Dividend related questions...

Why would it be illegal?
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Old 28.06.2017, 17:18
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Re: Some Dividend related questions...

Dont know, just asking

Some time ago I tried to open accounts on different online brokers (some from USA), and none was letting me open an account since there was no "representative" in Spain, maybe is same on this one, or you needed to have a UK address at least
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Old 28.06.2017, 18:26
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Re: Some Dividend related questions...

IB UK will open accounts in the EU & CH.
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