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-   -   Buying ETFs based in US while living in Switzerland - using swiss broker (https://www.englishforum.ch/finance-banking-taxation/284960-buying-etf-s-based-us-while-living-switzerland-using-swiss-broker.html)

CroCra 02.07.2018 19:26

Buying ETFs based in US while living in Switzerland - using swiss broker
 
Hello. I live in Switzerland and recently opened a Corner Trader Account. Im mainly interested in ETFs. I want to invest in some US ETFs like the Vanguard REIT (VNQ) which is based in USA.

So my question is if it makes a difference if I buy an ETF based in the USA like the VNQ or if I buy the Vanguard S&P 500 UCITS ETF (based in Ireland) as an example. There are quite some US ETF which are based in Ireland and Luxembourg, but not an attractive one for REITs like the VNQ.

Also: If I buy the S&P 500 UCITS ETF, don't I get US taxed regardless because the stocks are based in US? On Cornertrader the VNQ is available, but Im asking myself if there will be a tax issue or anything like that and if I should limit myself to only ETFs based in Switzerland, Luxembourg and Ireland (basically only ETFs which can be found on justetf.com) or if it really doesn't matter?

Rulercoaster 02.07.2018 23:19

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
I'm actually to lazy (29 degrees celsius in my room) to look for the source but there is a tax treaty between US and Switzerland which effectively means there shouldn't be any issues up to something like 5.6M$.
15% of dividends will be kept which can be reimbursed by filing some DA-1 form.

That being said dividends are taxed as income whereas capital gains are not (in Switzerland) so you might want to reconsider your choice of ETF.

I personally use InteractiveBrokers because CornerTrader is actually quite a bit more expensive. They handle some W-8BEN form for you too regarding US stocks and ETFs.

glinaa 03.07.2018 13:34

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2963796)
Hello. I live in Switzerland and recently opened a Corner Trader Account. I’m mainly interested in ETF’s. I want to invest in some US ETF’s like the Vanguard REIT (VNQ) which is based in USA.

If you want to trade US securities you'll do much better cost wise by opening an Interactive Brokers account.

Transaction fees and currency exchange fees will be a magnitude lower. You also wont have to pay the Swiss stamp duty. Withholding taxed can be claimed by filling a DA-1 form.

For investing in ETFs through CT, most cost effective way is to buy securities which are:
1. domiciled in CH, IE or LU
2. traded on SIX Swiss Exchange
3. traded in CHF
You'll still (usually) pay higher TER as compared to US funds though.

You'll be able to find what you need on
https://www.six-swiss-exchange.com/funds/etf_en.html
and check returns on Justetf.com or similar.

Enohzee 03.07.2018 13:58

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by glinaa (Post 2964060)
If you want to trade US securities you'll do much better cost wise by opening an Interactive Brokers account.

This

Swiss brokers suck

CroCra 03.07.2018 15:36

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Thanks for all the replys so far! Well, I already bought 2 ETFs so far a few weeks ago. 1x UBS SLI and the Vanguard S&P 500 (domiciled in IE). I've heard alot of positive things so far about Interactive Brokers, I guess it would be possible to transfer my current stocks to Interactive Brokers after the account is opened.

You're mentioning the most effective way on CT would be buying the ETF domiciled in CH, IE and LU but yes like you said, the TER on the US ETF's is usually so low that I'm still better off just buying the US ETF's I guess, even on CT (If I'm not switching).

Good thing to know though that it actually doesn't matter if I'm the owner of US ETF's since you can just claim them back with the form you mentioned.

Too bad I didn't know about InteractiveBroker before, I just did a swiss broker comparision and thought Corner Trader would be cheap, I guess he's just a cheap broker compared to other swiss brokers.

Dr Mick 03.07.2018 15:50

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2964108)
, I guess it would be possible to transfer my current stocks to Interactive Brokers after the account is opened.

It would be most likely cheaper to sell your ETFs on your Corner Trade account, transfer the cash to IB and then buy your ETFs again.

glinaa 03.07.2018 16:29

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2964108)
Thanks for all the replys so far! Well, I already bought 2 ETFs so far a few weeks ago. 1x UBS SLI and the Vanguard S&P 500 (domiciled in IE).

Have a look here:
https://forum.mustachianpost.com/t/t...f-investing/67

A point could be made for investing in US securities with IB on US exchanges and outside of US for exUS.

IB charges a minimum of 10$ a month "inactivity fee" until you have 100,000$ invested with them, so your situation and investing frequency matters a lot as far as fees are concerned.

Last but not least, the environment changes and it's no longer a problem to find good IE domiciled funds with <0.2% TER.

To give you an example, you could buy VEVE + VFEM on CT, traded in CHF on SIX with 90:10 ratio (90% developed, 10% emerging markets). This will result in effective TER of 0.186%. This will give you nearly identical exposure as NYSE listed VT with a TER of 0.11% but you may actually pay more in withholding TAX in the second case which will make it more expensive.

BTW as far as I know, CT does not charge for transferring securities, so you will be able to transfer at no cost.

EPMike 03.07.2018 16:50

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by glinaa (Post 2964137)
Have a look here:
https://forum.mustachianpost.com/t/t...f-investing/67

A point could be made for investing in US securities with IB on US exchanges and outside of US for exUS.

IB charges a minimum of 10$ a month "inactivity fee" until you have 100,000$ invested with them, so your situation and investing frequency matters a lot as far as fees are concerned.

Last but not least, the environment changes and it's no longer a problem to find good IE domiciled funds with <0.2% TER.

To give you an example, you could buy VEVE + VFEM on CT, traded in CHF on SIX with 90:10 ratio (90% developed, 10% emerging markets). This will result in effective TER of 0.186%. This will give you nearly identical exposure as NYSE listed VT with a TER of 0.11% but you may actually pay more in withholding TAX in the second case which will make it more expensive.

BTW as far as I know, CT does not charge for transferring securities, so you will be able to transfer at no cost.

Don't forget the stamp duty on SIX

glinaa 03.07.2018 17:00

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by EPMike (Post 2964144)
Don't forget the stamp duty on SIX

They are relatively miniscule, especially comparing to currency conversion fees on CT (or even more with some other Swiss brokers). This is 0.5% each way, so a whopping total of 1% (purchase+sale). This is why I only purchase CHF-denominated securities on CT.

CroCra 03.07.2018 17:38

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Thanks glinaa for the detailed explanation and the link. So from what I understand, CT actually isn't that bad for me because I'm planning to buy and hold for atleast 10/20/30 years. My asset which I can currently invest into ETF's / stocks is only around 12k CHF, so it would take me quite a while until I reach the 100k.

From the link it says CT isn't a qualified intermediary, which means I would be better off with only ETF's domiciled in switzerland and IE? Otherwise I won't be able to claim the 30% withholding tax back afaik?

What I don't like about the VEVE is the heavy focus on US stocks, since I already own the VUSA, it would be too much of an overlap imo. The VFEM looks like a decent buy which I also already considered.

The only problem I have is that there's not really a IE or swiss domiciled real estate ETF comparable to the VNQ. I guess the GLRE or the USRE could be decent buys and somewhat similar.

Sooner or later I want to invest in single stocks like AMD anyway. but until then, Brokers like RobinHood might be available in Switzerland already.

CroCra 03.07.2018 18:30

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Actually what I forgot to compare is also the TER on the VNQ is only 0.12%, while the USRE and GLRE both have a TER of 0.40%. So I would have to do soem calculations and depending on how much I invest, it might actually still be better to go with the US VNQ even if I don't get the withheld taxes of 30% fully back afaik.

fatmanfilms 03.07.2018 18:40

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2964185)
Actually what I forgot to compare is also the TER on the VNQ is only 0.12%, while the USRE and GLRE both have a TER of 0.40%. So I would have to do soem calculations and depending on how much I invest, it might actually still be better to go with the US VNQ even if I don't get the withheld taxes of 30% fully back afaik.

US stocks held through a US broker only have 15% withholding tax.

CroCra 03.07.2018 18:48

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Yes, but US stocks held through a swiss broker would be 30% if I understand correctly?

fatmanfilms 03.07.2018 19:12

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2964188)
Yes, but US stocks held through a swiss broker would be 30% if I understand correctly?

So don't bother with a CH broker.

glinaa 03.07.2018 21:24

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by CroCra (Post 2964169)
Thanks glinaa for the detailed explanation and the link. So from what I understand, CT actually isn't that bad for me because I'm planning to buy and hold for atleast 10/20/30 years. My asset which I can currently invest into ETF's / stocks is only around 12k CHF, so it would take me quite a while until I reach the 100k.

Basically for as long as you only do 4-5 ETF trades a year, the costs are comparable (until you reach 100,000 USD).

Investing in the US through IE domiciled funds means you take advantage of the tax treaties and pay the same 15% withholding tax, so effectively the only difference is TER and fees. Your VUSA has 0.07% TER so there's not a lot of room to optimize here.

Then again, if you want to buy VNQ and single stocks from the US you are surely better off going with IB.

fatmanfilms 03.07.2018 22:00

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by glinaa (Post 2964242)
Basically for as long as you only do 4-5 ETF trades a year, the costs are comparable (until you reach 100,000 USD).

Investing in the US through IE domiciled funds means you take advantage of the tax treaties and pay the same 15% withholding tax, so effectively the only difference is TER and fees. Your VUSA has 0.07% TER so there's not a lot of room to optimize here.

Then again, if you want to buy VNQ and single stocks from the US you are surely better off going with IB.

Irish funds don't have any tax credits so you loose the 15% US withholding tax in any case & the dividends are then fully taxable.

Disjoint 06.10.2021 19:28

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Well given this post has been incredibly helpful (favouring IE over US ETFs)
There is an Asian high yield ETF that looks quite good AHYG SP but in Singapore. What's the tax implication of an SP ETF in Swiss land? I broker with IB.
Thank you in advance!

I answered my own question: you have to be in Singapore to buy it. So doesnt' matter...

BraveLilToaster 07.10.2021 17:20

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Have any Americans used Schwab for brokerage and retirement accounts while residing in CH? My current broker (who can no longer manage me in CH) recommends them above IB who they say is more akin to RobinHood (PFOF and all that).

appreciate any input

Phil_MCR 07.10.2021 17:37

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Quote:

Originally Posted by BraveLilToaster (Post 3354474)
Have any Americans used Schwab for brokerage and retirement accounts while residing in CH? My current broker (who can no longer manage me in CH) recommends them above IB who they say is more akin to RobinHood (PFOF and all that).

appreciate any input

he's got it backwards. IB do not take payment for order flow, whereas Schwab do.

i started with Schwab but moved to IB primarily because the execution was much better on IB. but i think that both are OK.

BraveLilToaster 07.10.2021 22:46

Re: Buying ETFs based in US while living in Switzerland - using swiss broker
 
Oh really? well I'm glad i asked then before just signing up, thanks


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