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  #261  
Old 01.12.2017, 08:46
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Re: Interactive brokers in Switzerland

The tax paperwork from IB was always sufficient for my accountant to prepare my Swiss tax return. No problems on that front. No need to track capital gains in Switzerland. The annual account statement showing account balance was good enough for wealth tax, and the dividend reporting paperwork was all that I needed for reporting dividend income.
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  #262  
Old 01.12.2017, 08:59
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Re: Interactive brokers in Switzerland

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The tax paperwork from IB was always sufficient for my accountant to prepare my Swiss tax return. No problems on that front. No need to track capital gains in Switzerland. The annual account statement showing account balance was good enough for wealth tax, and the dividend reporting paperwork was all that I needed for reporting dividend income.
Great news, especially considering it is free! Thanks for confirming.
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  #263  
Old 09.01.2018, 11:38
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Re: Interactive brokers in Switzerland

Hey there, I just read the full 14 pages of discussions and these have been very useful. Thank you for your great contributions !

I am based in Switzerland and I'm thinking about opening an IB account with a very "inactive" investment strategy, meaning essentially that I want to buy and hold Blue chips Swiss (and possibly foreign) stocks for horizons > 5 years.

The reason I came here initially is of course the search of minimal transaction+account management fees.

Since the account balance would be >100k USD I understand that the inactive account would cost me zero (in case I just hold my stock positions). For the record, my Swiss account is at postfinance, but I understand that regular bank transfers to the IB account would be cost free.

I have one more question to feed the debate.
As mentionned here, the confederation does not tax stock profits (e.g. if I sell a stock for CHF 2 after having bought it for CHF 1), but heavily taxs dividends; which is actually a big issue given my original plans (buy and hold swiss blue chips).
So I was wondering if alternatives exist to bypass the problem. e.g. some kind of "total return" stock or some ETF linked to a total return index. Essentially, I would be looking to take an exposure to stocks paying dividends (Roche, Swatch group, Swisscom, UBS, whatever...) in a total return asset, where the dividend is automatically reinvested.
Any idea if such a thing exists ?
I'll start doing research on my own and edit if I find something interesting.

Thanks again for the very helpful topic !
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  #264  
Old 09.01.2018, 11:54
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Re: Interactive brokers in Switzerland

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Since the account balance would be >100k USD I understand that the inactive account would cost me zero (in case I just hold my stock positions). For the record, my Swiss account is at postfinance, but I understand that regular bank transfers to the IB account would be cost free.
CHF or EUR transfers from PF would be free, but not USD

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As mentionned here, the confederation does not tax stock profits (e.g. if I sell a stock for CHF 2 after having bought it for CHF 1), but heavily taxs dividends; which is actually a big issue given my original plans (buy and hold swiss blue chips).
So don't buy stocks for the dividend, but for total return? Internal compounding is superior to dividend reinvesting.

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So I was wondering if alternatives exist to bypass the problem. e.g. some kind of "total return" stock or some ETF linked to a total return index. Essentially, I would be looking to take an exposure to stocks paying dividends (Roche, Swatch group, Swisscom, UBS, whatever...) in a total return asset, where the dividend is automatically reinvested.
These are called accumulating funds, and they're taxed to bejesusses in Switzerland on reinvested dividends. Even the synthetic types where there are no dividends inside at all I hear are treated by ESTV as if they received dividends. Best check your fund on ICTAX before buying
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  #265  
Old 09.01.2018, 13:25
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Re: Interactive brokers in Switzerland

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CHF or EUR transfers from PF would be free, but not USD


So don't buy stocks for the dividend, but for total return? Internal compounding is superior to dividend reinvesting.


These are called accumulating funds, and they're taxed to bejesusses in Switzerland on reinvested dividends. Even the synthetic types where there are no dividends inside at all I hear are treated by ESTV as if they received dividends. Best check your fund on ICTAX before buying
Thanks for your reply Ivank, and all the previous ones on this topic.
Regarding the transfer to the IB account, I would be transfering CHF from my PF account. So we're good

About your first explanation on dividends, I agree with your conclusion but then it would mean to avoid taking exposure on Swiss stocks which pay a dividend... which is not easy if you want to focus on blue chips + long term buy&hold.
Given your last explanation on accumulating funds I guess that the solution you suggest (buy stocks which pay small/no dividends and instead invest or rebuy their own share) is probably the only one.
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  #266  
Old 09.01.2018, 13:31
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Re: Interactive brokers in Switzerland

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the solution you suggest (buy stocks which pay small/no dividends and instead invest or rebuy their own share
That's not exactly what I suggested. Buybacks of overvalued shares especially if funded by debt issuance rather than profits are even worse.
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  #267  
Old 09.01.2018, 14:05
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Re: Interactive brokers in Switzerland

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About your first explanation on dividends, I agree with your conclusion but then it would mean to avoid taking exposure on Swiss stocks which pay a dividend... which is not easy if you want to focus on blue chips + long term buy&hold.

Given your last explanation on accumulating funds I guess that the solution you suggest (buy stocks which pay small/no dividends and instead invest or rebuy their own share) is probably the only one.
Most of the stocks that you've listed pay between 2-3% in dividends. Assuming you've got 100K invested, you're talking about 3K of dividends a year. At a 33% tax rate, that's 1'000 in tax each year.

It's not nothing, but I wouldn't let this alone be the decision-making criteria for whether to buy a stock or not. Long term growth and prospects for success are much more important, and a consistent, reliable, growing dividend can be a good sign of the overall fiscal health of the company.

On the other hand, if you were to gear a portfolio to be strongly dividend-focused (income-generating, for retirement, for example), this is probably not the wisest decision with the way the Swiss tax dividends. In the US, on the other hand, this is a smart strategy given the much lower taxation of dividends vs. earned income.
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  #268  
Old 09.01.2018, 14:42
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Re: Interactive brokers in Switzerland

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Most of the stocks that you've listed pay between 2-3% in dividends. Assuming you've got 100K invested, you're talking about 3K of dividends a year. At a 33% tax rate, that's 1'000 in tax each year.

It's not nothing, but I wouldn't let this alone be the decision-making criteria for whether to buy a stock or not. Long term growth and prospects for success are much more important, and a consistent, reliable, growing dividend can be a good sign of the overall fiscal health of the company.

On the other hand, if you were to gear a portfolio to be strongly dividend-focused (income-generating, for retirement, for example), this is probably not the wisest decision with the way the Swiss tax dividends. In the US, on the other hand, this is a smart strategy given the much lower taxation of dividends vs. earned income.
Can you elaborate? Are you saying in US of A dividends are not counted as income, but capital gains are?
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  #269  
Old 09.01.2018, 15:07
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Re: Interactive brokers in Switzerland

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Can you elaborate? Are you saying in US of A dividends are not counted as income, but capital gains are?
US taxes dividends from long term holdings separately and at lower rates than ordinary income. The search term you're looking for is "qualified dividend".

They also tax capital gains at similar rates, so that's why dividend growth investing makes a lot of sense there - there's not much difference tax wise between dividends and capital gains anyway.

But not in Switzerland. Here dividends are taxed to death and capital gains are tax free, so you should adapt your investment strategy accordingly
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  #270  
Old 09.01.2018, 15:12
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Re: Interactive brokers in Switzerland

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Yeah, US taxes dividends from long term holdings separately and at lower rates than ordinary income - https://en.wikipedia.org/wiki/Qualified_dividend

They also tax capital gains at similar rates, so that's why dividend growth investing makes a lot of sense there - there's not much difference tax wise between dividends and capital gains anyway. But not in Switzerland.
I guess I'll keep my CH residence at least until I retire.
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  #271  
Old 13.01.2018, 13:50
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Re: Interactive brokers in Switzerland

Dear all

I am looking for a cost effective method to transfer CHF from Postfinance to Singapore. Learnt about the option via IB but am not really keen to start trading anything...

So would appreciate if someone could enlighten me if it is worth the trouble to open an IB account just for the big amount transfer CHF-SGD? Any other costs I need to be aware of....

Thanks!
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  #272  
Old 13.01.2018, 14:03
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Re: Interactive brokers in Switzerland

The answer depends on how big, and what other options do you have and how much they cost. Give your bank a call and ask what spread they can offer you, some people reported PF's trading desks can be very, very generous with spreads on the phone, much lower than their online offers
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  #273  
Old 13.01.2018, 14:28
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Re: Interactive brokers in Switzerland

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The answer depends on how big, and what other options do you have and how much they cost. Give your bank a call and ask what spread they can offer you, some people reported PF's trading desks can be very, very generous with spreads on the phone, much lower than their online offers
Indeed I think you need to be talking 25k plus in CHF for a quote. I got a good deal last year on a 100k plus transaction. Ive since left UBS for PF especially given their custody fees. Doesn’t PF let you open an SGD online account? On my GBP transactions Ive gotten a good deal from my EUR/CHF account on rates, additionally my UK bank doesn’t charge me to receive in GBP and the transfer costs 2CHF IIRC, once I secured my exchange rate between my various currency accounts. They’re also handy when ordering cash in the denominations of your choice before a trip.

Last edited by magyir; 13.01.2018 at 14:34. Reason: additional info
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  #274  
Old 13.01.2018, 14:37
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Re: Interactive brokers in Switzerland

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I got a good deal last year on a 100k plus transaction.
Exactly how good in terms of spread?

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Ive since left UBS for PF especially given their custody fees.
Actually they're not so good with regards to this. Custody costs nothing with most of better brokers. And trading fees are outrageously high at both

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They’re also handy when ordering cash in the denominations of your choice before a trip.
Which is going to cost you big time, at least 1% last time I checked
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  #275  
Old 13.01.2018, 15:50
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Re: Interactive brokers in Switzerland

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Exactly how good in terms of spread?
Hi IIRC it ws about 2-3% better around the time CHFGBP was available for about 1.25

Actually they're not so good with regards to this. Custody costs nothing with most of better brokers. And trading fees are outrageously high at both

I got some credit over 100 CHF when my acct was debited the 90CHF fee so effectively free.

Which is going to cost you big time, at least 1% last time I checked
Itís true they started to charge 1% on Ä non-ATM transactions, it depends on whether you think 1% is worth getting the denominations you want especally once you save on the exchange spread between accounts which is usuly at least 1% better although YMMV depending on amounts and if youíre a Plus customer.

I use the Online Banking Messaging a bit to reclaim fees usually successfully
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  #276  
Old 13.01.2018, 16:04
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Re: Interactive brokers in Switzerland

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It’s true they started to charge 1% on € non-ATM transactions, it depends on whether you think 1% is worth
No. If I need cash, I'd usually get a better deal withdrawing from a local ATM with Revolut or Schwab card. Most of the time I don't need cash, credit cards are widely accepted in developed world.

You still didn't mention the spread of a "good deal" that they gave you... If it was 1% which you seem to imply you think is good, then bad news for you - you got ripped off. For a tight spread you apparently do have to phone them, and even then you won't get the spreads as low as with IB - IB's spreads are on the order of 0.01% or about 0.5-1 pips, at least for major currencies like USD, EUR, GBP.

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I use the Online Banking Messaging a bit to reclaim fees usually successfully
I've had a negative experience with them once, always negotiate in advance, not after the fact.
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  #277  
Old 13.01.2018, 17:48
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Re: Interactive brokers in Switzerland

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No. If I need cash, I'd usually get a better deal withdrawing from a local ATM with Revolut or Schwab card. Most of the time I don't need cash, credit cards are widely accepted in developed world.

You still didn't mention the spread of a "good deal" that they gave you... If it was 1% which you seem to imply you think is good, then bad news for you - you got ripped off. For a tight spread you apparently do have to phone them, and even then you won't get the spreads as low as with IB - IB's spreads are on the order of 0.01% or about 0.5-1 pips, at least for major currencies like USD, EUR, GBP.


I've had a negative experience with them once, always negotiate in advance, not after the fact.
Thanks. If you look at the quote in my message you’ll see my answer starting with Hi, IIRC it was 2-3% better....after the first line quoted.

I’ve no idea how it got lost from the message, I was replying on my mobile in a shopping centre.

Thanks for the IB comparative. I was aware of Schwab so I’ll take a closer look.

For all accounts don’t forget to include them all on the Tax return. According to a report I read recently 1 in 47 taxpayers in Kanton ZH have self reported previously unlisted accounts abroad utilising the 2011 Amnesty provisions, suspected to be a result of the Common Reporting Standard, but that’s another thread entirely.
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  #278  
Old 13.01.2018, 18:46
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Re: Interactive brokers in Switzerland

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Thanks. If you look at the quote in my message you’ll see my answer starting with Hi, IIRC it was 2-3% better....after the first line quoted.
You must be a lawyer, judging from such completely non-informative answers... What was the spread from mid market rate? Or the exchange rate and date, we'll look it up.
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  #279  
Old 13.01.2018, 21:26
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Re: Interactive brokers in Switzerland

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Most of the time I don't need cash, credit cards are widely accepted in developed world.
Most credit cards don't have good exchange rates. That's where Revolut comes in handy.
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  #280  
Old 26.01.2018, 06:44
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Re: Interactive brokers in Switzerland

The USD is getting weaker and weaker... Will trump want it to stay weak and is this bad news for IB investors who mostly trade USS?
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