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Old 05.05.2009, 11:47
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Doubts about interests and dividends earned abroad

Hi Everyone,

first of all I am extremely happy to have found this great forum and to see that there is a lot of great people willing to help others about the messy world of taxes.

I currently live in ZH-ZH and have a work permit B married in the C0 tarif (we are both angestellt) everything is doing great and I am happy to help this great country to move on.

I have some doubts regarding dividends and interests earned outside switzerland in specific in USA. Maybe this questions have been asked 1000s of times but this forum have grown very big and is difficult to find some answers .

OK back to my issue.
We have lent some money in the USA which are generating interests and other are generating dividends.

From what I see I have been already charged 15% withholding tax in the USA on the dividends (and I think the same will happen with the interests) and from what I read is because of the double tax treaty between CH-USA (15% is going to stay in the US). The interest and dividends are kept in a US account for which I am able to decide to bring back to CH at my own will or need.

So, this capital which is being used to generate interest have been generated and quellgesteuert in CH then in some way transferred OUTSIDE switzerland and generating "income".

My questions are the following:

1. What is the best way to treat this situation? as a Private or using a Firma that holds that "portfolio" ?

2. as a Private, how will I be taxed?

3. Do I have to declare the income from interest and dividends yearly even if I leave it outside CH? Is there any advantages or disadvantages of doing that?

In all honestly it is not my intention to evade or hide money from taxes, I just want to do it in a way where I can maximize my profits and not loose almost all in paying taxes.

I will be more than happy to have some answers from the experts on this forum... which will consequently depending on the questions lead me to ask for a recommendation for a "berater" in ZH that can help me further and that wont take an eye out of me in fees .

thank you very much in advance and waiting for your reply.
Gustav
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Old 05.05.2009, 17:20
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Re: Doubts about interests and dividends earned abroad

1. Consult a tax consultant

2. You are taxed on your global assets and global income

3. You must declare assets and income outside of CH.

For your first year's return, use a consultant.
Afterwards consider doing it yourself using the good old "copy and paste" method. But everything depends on the complexity of your situation.
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Old 05.05.2009, 18:39
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Re: Doubts about interests and dividends earned abroad

Thanks Kiwi,,,

I would really appreciate if someone else can tell me a little bit more of what is the range of taxes that I might have to pay ...

Thanks for your time
Gustav
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Old 05.05.2009, 22:13
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Re: Doubts about interests and dividends earned abroad

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Thanks Kiwi,,,

I would really appreciate if someone else can tell me a little bit more of what is the range of taxes that I might have to pay ...

Thanks for your time
Gustav
ZH has an online tax calculator. Google Steueramt.
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Old 06.05.2009, 08:57
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Re: Doubts about interests and dividends earned abroad

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Thanks Kiwi,,,

I would really appreciate if someone else can tell me a little bit more of what is the range of taxes that I might have to pay ...

Thanks for your time
Gustav
Rather dependent on your income and situation

Do you have annual income of 100k, 1m, or 10m?
Do you have assets of 100k, 1m, 10m, or 100m?
Do you have liabilities of 100k, 1m, 10m, or 100m?

Tax rates will vary between 20% to 40% of your total income, depending on what your taxable income is, where you live (town / canton), married, religion, etc etc etc.

Best is to use the online calculators, as the previous poster said: google "steueramt"
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Old 06.05.2009, 09:08
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Re: Doubts about interests and dividends earned abroad

Hi GoldTop,

thanks for your help,,, yes I know and I have used it once to estimate how much shall I be paying but I was not sure what to fill with what

Is it so that for the private individual,,, everything you produce like from interests on loans you make and dividends will be considered income ?

What if for example you loose the money you loaned because of a default and good piece or all of your capital is gone?

How will that be treated in Switzerland? Will be great to have an idea...

Thanks for your help I am really grateful..
Gustav
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Old 06.05.2009, 09:15
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Re: Doubts about interests and dividends earned abroad

Thanks again Kiwi,

I think I got it... so the point is that my "other income" whether is from loan or interests will be taxed as "income" and not in any other "special" way.

So in the end I am paying a withholding tax of 15% in the country of source of income, plus the tax that is dependent on the income in my kanton.

Another questions that is burning inside me is the following:

1. As me and my wife are under permit B and quellgesteuert... how shall someone in this case proceed to declare such income? Do I have to take care of that myself and get my hands on the forms from the steueramt?

2. The same is true for the paltry 0.5% that we receive at the end of the year on our savings account, we get taxed at 35% , I assume that if I declare that also I will get the difference back (depending on how much % tax I must pay)...

Thanks for the guidelines.... and great help

Gustav
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Old 06.05.2009, 13:44
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Re: Doubts about interests and dividends earned abroad

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Is it so that for the private individual,,, everything you produce like from interests on loans you make and dividends will be considered income ?
Correct, because at the end of the day all money you earn from all sources is taxable income.

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What if for example you loose the money you loaned because of a default and good piece or all of your capital is gone?
Then I advise you use a tax consultant to ensure that everything is properly accounted for. The Swiss system taxes wealth as per 31 December - so if you lost 50% of your wealth on 30th December, then that is included on your wealth assessment per 31 December
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Old 06.05.2009, 13:48
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Re: Doubts about interests and dividends earned abroad

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I think I got it... so the point is that my "other income" whether is from loan or interests will be taxed as "income" and not in any other "special" way.
Yup, correct

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So in the end I am paying a withholding tax of 15% in the country of source of income, plus the tax that is dependent on the income in my kanton.
Yes, but the tax paid in other countries is also considered on the tax form, provided that the other country has a double tax agreement with Switzerland.
So you only pay double tax if the country has no tax agreement

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1. As me and my wife are under permit B and quellgesteuert... how shall someone in this case proceed to declare such income? Do I have to take care of that myself and get my hands on the forms from the steueramt?
Here I don't know, please ask a tax consultant.

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2. The same is true for the paltry 0.5% that we receive at the end of the year on our savings account, we get taxed at 35% , I assume that if I declare that also I will get the difference back (depending on how much % tax I must pay)...
Yes, the end of year Swiss bank statement shows all withholding taxes you have paid, which are then credited against your total tax bill.
So you don't "get the difference back" in form of a repayment, but rather the tax paid is used when calculating the total tax bill

eg:

Total taxable income: 100,000
Tax at 20% = 20,000
Less credits of withholding taxes paid: -500
Total tax to pay: 19,500

(all figures and rates are fictitious, for demonstrative purposes only)


PS: My goal in life: I want to pay $1m in tax - or make that 1m CHF
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Old 06.05.2009, 20:37
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Re: Doubts about interests and dividends earned abroad

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Hi GoldTop,

thanks for your help,,, yes I know and I have used it once to estimate how much shall I be paying but I was not sure what to fill with what

Is it so that for the private individual,,, everything you produce like from interests on loans you make and dividends will be considered income ?

What if for example you loose the money you loaned because of a default and good piece or all of your capital is gone?

How will that be treated in Switzerland? Will be great to have an idea...

Thanks for your help I am really grateful..
Gustav
  1. Dividends and interests are treated exactly like earned income.
  2. Switzerland generally does not tax capital gains (unless you are classified as a professional). Hence, there is no tax relief on capital losses either.
  3. All loans you give should be shown as assets. You must name the borrower. Asset is taxed as your wealth and interest taxed as income.
  4. All loans you take must be shown as debts. You must name the lender. Your payments can be subtracted from taxable income and taxable wealth.
  5. If your borrower defaults, the tax office might ask for explanation and cross-check against the borrower's tax return.
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Old 08.05.2009, 09:21
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Re: Doubts about interests and dividends earned abroad

Great Information!!!,

it was really helpful to know all these details, at least now when I go to my a steuerberater at least I will know what hes talking about ,,, but everything is quite clear to me much more than when I first asked

By the way kiwi: I also hope to soon have to pay 1M in taxes too

Take care everyone and thank you very much for taking some of your time for me.

GS
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Old 21.02.2013, 14:30
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Re: Doubts about interests and dividends earned abroad

Where would one include dividends that are earned abroad (USA)from taxes. The stocks that earned these dividends were obtained through a us brokerage and thus have no Valor number that i can input in the private tax software. There was also no withholding tax because it was all done through a US broker. ( I of course reported it on my 1040) but dont know how to do it on the ZH form....please help!
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Old 21.02.2013, 14:34
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Re: Doubts about interests and dividends earned abroad

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Where would one include dividends that are earned abroad (USA)from taxes. The stocks that earned these dividends were obtained through a us brokerage and thus have no Valor number that i can input in the private tax software. There was also no withholding tax because it was all done through a US broker. ( I of course reported it on my 1040) but dont know how to do it on the ZH form....please help!
On the DA-1 (if you wish to claim a credit for any withholding tax)
On on the Wertschriften und Guthaben Verzeichnis (without reclaiming the withholding tax)

Doesn't matter if you have no valor number, you just enter the details manually.
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