Hello.
I’ve been trying to get a clear answer, but no luck.
As a Swiss resident, capital / dividend gains (e.g. ETFs) are tax free.
Well, not entirely correct - investments in the US are subjected to tax (typically 15%).
My queston - are there countries which don’t charge capital gaim taxes?
Switzerland is one of those, but often low dividend options.
Thank you
Ariel
You can have the 15% reimbursed by completing the appropriate sections on the Swiss tax declaration forms.
This is, assuming that you are entitled to a refund (not citizen of USA or having residence in the USA).
PS: If you even use a Swiss bank to buy US ETFs, they will then automatically give you all the documents at the end of the year enabling you to get a refund.
Interesting, I didn’t know that.
Yes, there are many countries which have no capital gain taxes. Some don’t have any personal taxes at all!
A quick search turned up at least 29.
That means that if i hold assets in their stock exchange, the gains are tax free in Switzerland. Right?
Are there some decent countries on your list?
Your worldwide income gets taxed here, doesn’t matter which country your financial security was issued in.
IIRC a non-citizen non-resident natural person loses 15% of the US dividends on US stocks and US ETFs. The tax at source is 30%, which can be halved by submitting the W-8BEN provided your broker qualifies. The other half (15% of the dividend) is lost to you.
However an ETF holding US stocks or bonds and domiciled outside of the US, in Luxemburg for example, being a legal person, will get 100% of the dividends and typically pay out that much. But its fees and TER might be bigger than that of its US counterpart, eating up part or even all of the higher dividend.
I dunno? Why don’t you try with your favourite search engine?
Has nothing to do with capital gains. On US investments one must pay a US tax on capital gains. The rate depends upon short term or long term gains. The tax is only applied upon sale of the investment. Also there is a tax credit on capital loss. However, this tax is irrelevant to the Swiss tax authorities.
The refund from Switzerland only applies to US tax paid on dividends and interest (i.e. income) from investments. This is due to an agreement treaty between the US and Switzerland to prevent double taxation.
By the way dividends in CH are not tax free. They are taxed like any other income.
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For U.S. securities and ETFs, dividends are typically subject to a 30% withholding tax. On your bank statement, it will indicate that 15% of this amount is reclaimable via Form DA-1 when filing your Swiss tax return the following March.
ETFs domiciled in Ireland (IE) or Germany (DE) generally do not apply withholding tax on dividend payments. However, the dividends are still treated as taxable income in Switzerland and will be taxed at your personal income tax rate (e.g. based on salary or other annual income).
Dividends from individual stocks follow the tax rules of the country of origin. For example:
- German stocks apply a 26.38% withholding tax, which is credited by the Swiss tax authority against your tax liability.
- Italian stocks are subject to a 26% withholding tax.
- Other countries have their own rates and policies.
For U.S. securities, an alternative option is to use a non-Swiss broker or foreign bank that allows you to submit Form W-8BEN. This reduces the withholding tax to 15%, applied directly to any income received from U.S. securities. Note: This option is only available to individuals who are not U.S. citizens.
Capital Gains are not taxed in Switzerland.
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Yes, exactly, for dividends there is a 30% withholding tax in the USA and
- one 15% is reclaimable via Form DA-1
- another 15% is reclaimable via Form R-US 164 (“reimbursement of additional USA withholding”, some cantons have their own version but the name is the same)
subject to some minima (eg reimbursement amount > 100 chf). Needless to say that these dividends will be declared and taxed in Switzerland