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Well, the Interactive Brokers chat almost made me have some doubts; but they told me to update my W8-ben form; which therefore certifies my residence.
They even have my taxpayer number in the canton of Bern; so apparently they have everything they need to properly pay the 12.8% to the French.
Jerome, you may not have French shares but maybe European shares? Or did you have some? Did IB manage everything well?
Otherwise, how does it work in Japan? I imagine that the Japanese also take a % of your dividends, that Switzerland taxes you on the entirety of your dividend (therefore double taxation) and reimburses you afterwards the amount taken by the Japanese using the DA1 form?
With IB I only have a European value since this year, so not taxed yet. However, I really wouldn't see why IB would do things differently than they usually do.
For Japan, they typically tax me 15%. I report this during the annual taxation via the tax service software (which completes the DA1 form). It then goes into flat-rate imputation and, as for the CH withholding tax, the amounts withheld are deducted from the income tax.
In any case, thank you very much for your feedback. I am not 100% convinced that everything is in order on the IB side on French dividends but:
– on the other hand I don’t think that sending them French forms upstream will change much. IB seems to be telling me that in any case, since they are based in the UK, they don’t really consider me as a Swiss resident who receives French div.. Anyway we’ll see what they do
– even if it doesn’t go well and they keep too much money for the French treasury, this money can be recovered by being lazy, which will be painful at first; but I imagine you get used to everything 🙂
Thanks again for your feedback. The next dividend on Total (you guessed it 🙂 ) falls in January 2021 and I will keep you informed: I promise
See you soon
Yes I actually thought you were talking about this company :)
Keep us posted, these tax parentheses are always instructive.
Hello !
There you go, the Total dividend is visible on my IB account. From what I see, there was a withholding of 28% on the amount…
Why 28%? I have the impression that this is the withholding rate for legal entities. Except that I am a natural person and should therefore benefit from an advance tax of only 12.8% for the French…
In short, I feel like I should take steps with the French tax authorities to recover the overpaid tax...
Frankly, these taxes on dividends are disconcertingly opaque and complex. I think that this was designed like this by the IRS officials so that no one would claim them! I looked into where this rate of 28% could come from but it doesn't make sense. If they taxed you as a US resident it would normally be 30%. As a Swiss it would normally be 12.8%. Maybe they do consider you as a legal entity... Weird. Maybe write to IB to ask them.
I also looked at my Japanese dividends and it doesn't match either. I'm taxed at 15% when it should be 20% (at the same time I'm not going to complain).
In short. Frankly, I don't bother too much with these details. In any case, you have to apply for a deduction from your income tax in Switzerland. To do this, the DA-1 form (application for a flat-rate tax deduction) must be completed when you file your tax return. This allows you to avoid being taxed a second time on the entire amount already deducted (in the end, it's like the Swiss withholding tax).
Except for Finland, you can get at least half of the extra tax back this way. For the Netherlands, it's even the whole amount.
The question that arises is for the balance to be recovered. Here it becomes not only complicated, but also quite expensive. For dividends from certain countries, it is mandatory to go in person to the financial institution. For other countries the procedures can take several years. In addition, these requests generate additional administrative costs from the bank and public administrations which often exceed the balance amount that could be recovered! This means that for it to be worth it, a large dividend amount would have to come from the same stock and the portfolio would not be too fragmented. It is therefore difficult to apply when the portfolio is somewhat diversified, across several stocks and countries.
So recover in flat-rate tax via the DA1. And for the rest, it's up to you to see if you want to fight to recover them and especially if it's worth it. I don't know for France if you can recover the whole thing or only half via this means.
And then if you don't want to be bothered with withholding tax on dividends, you can buy British stocks which are not taxed.
Hi !
Overall I'm not super worried. I kind of expected it to be a mess. I'll ask IB about this 28% thing but I highly doubt they'll go to 12.8% for the next dividends (which are quarterly, for Total).
Indeed, with the DA1, I will recover 12.8% of the dividend, which means that 28% – 12.8% = 15.2% will remain in the pockets of the French tax authorities. To speak in real money, we are talking about 500 shares that pay a total of 2.64 EUR of div each in 1 year, that is to say EUR 1,320 of annual dividend on which the French tax authorities unduly keep 15.2%, that is to say almost exactly EUR 200.
It's enough of an annual amount for me to try to recover it myself with my little hands; but not enough to keep me from sleeping. Besides, I'm not convinced that there are fees if I do the steps alone. I know that IB offers an overpriced service to recover the money; but I plan to do it alone.
Sur ce site : https://bofip.impots.gouv.fr/bofip/3243-PGP.html/identifiant%3DBOI-INT-CVB-CHE-10-20-30-20150812
It is marked
"
To obtain a refund of the excess withholding tax paid in the event of non-application of the conventional rate when paying income, the procedure is as follows.
In the matter of dividends and interest, reimbursement requests (request on plain paper accompanied by the corresponding forms and the beneficiary's bank details) must be made to the Capital Income Unit of the Directorate for Residents Abroad and General Services, whose contact details are as follows:
Directorate of Residents Abroad and General Services
Capital income division
10, Centre Street
TSA 30012
93 165 NOISY LE GRAND CEDEX
"
I feel like I just have to send them some supporting documents and a bank account for payment and it's done free of charge... If it takes time I don't really care as long as it works and it's pretty simple.
In short, we are talking about steps to be taken next year. So we have time to see it coming!
Ok thanks for the feedback. Keep us informed if ever of the result of your efforts, it is always interesting to know.
Good morning,
Regarding dividend taxation, these foreign taxes at source are indeed problematic and eat away at a significant portion of this income. Example: Total, VW, etc.
I saw that many of these foreign securities are also listed on the Bern stock exchange, in CHF. Does anyone know if the dividends are treated as if they were Swiss shares? Or the withholding tax of 35% which is recoverable anyway?
Example with this title: https://www.bxswiss.com/instruments/DE0007664005
On the other hand, it is not very liquid. But if you want to do buy and hold it is not a problem. Do you think it is risky? Are these "real" stocks or some other dodgy exotic financial instrument?
Good day
Hi,
Not sure about 100% but in my opinion they are still taxed at source for foreign tax.
And as you say, not great in terms of volume.
I've never been very keen on these replications.Hello, to continue on the subject of dividend taxation.
– The latest tax statement of my title pf (2021, paid) has a QR-Code. It can be imported into the tax return (me Fribourg) and it automatically imports the wealth and dividends. Considerable time saving.I have US, FR, UK and CH titles. Some remarks:
– FR: so there is a withholding tax of 26.5%. Then, on the BCV statement they specify the part recoverable by the CDI (too complex I give up on that), and the non-recoverable part called “flat-rate imputation”. This amount goes into the BCV statement then onto my tax return in the DA-1 form. And theoretically, this amount is supposed to be deducted from my invoice sent by the canton. I checked, even in 2020 they never reimbursed me anything. On your side, how is this reimbursement materialized?
– US: So there is a big disappointment. My US shares have a withholding of 30% and nothing else. So fiscally I am taxed on the gross amount, while having already paid 30% at source. More than half of the dividend is therefore eaten. Is it an error on my BCV statement or are you doing something else to recover part of it?
– UK: My tip has been to favor English stocks for the past 1-2 years. The CDI specifies that there is no withholding tax. Nada. And I confirm it. So I take advantage of it.Happy Sunday
Hi,
For FR (or other foreign country outside the USA):
– seeking reimbursement is indeed very complex, slow and does not bring much in
– it is therefore better as you have done via the flat-rate imputation which avoids double taxation
– the amount is not reimbursed but is deducted from the tax payable (as for the Swiss withholding tax)For the USA: the withholding tax must be split into two parts of 15% each in the declaration. 15% for the US tax authorities and 15% of additional withholding. The latter is recoverable and is deducted from the tax to be paid.
For UK: yes indeed but you will obviously be taxed on income, which ultimately does not change much. And then it would be a shame to close the door to other titles with potential for tax reasons which ultimately carry very little weight in the balance.
A +
Good morning,
I am a little surprised by your deduction of 30% at source for the US divs.
When I opened my account with IB, they actually started with 30%. I complained and they kindly guided me to fill in the information about my country of residence CH online. It went back to 15% and they refunded me retroactively.
It is your broker who must make a correction. But I can understand that it is complex for them, and very unprofitable.Additional clarification on US dividends:
_ at a Swiss broker it is 2×15% (Swiss and American tax)
_ at IB it is only 15% since obviously the Swiss withholding tax is not collected. On the other hand, we are taxed when declaring…Hello everyone, and hello Jerome,
When filing my 2022 tax return, I calculated on the ICTax website the gross return before anticipated tax of an S&P500 ETF that I have had for a long time.
And surprise, I see that on 100 CHF of ETF the dividends on 2022 represent 1.4% gross. Is it normal that the dividends received on an ETF SP500 support are close to 1% or did I make a mistake?
Note that the dividends calculated from IB (annual statement) on my other portfolio based on rather individual shares by following your determining PF Jérôme, I arrive rather at a gross yield of 3 to 3.5%.
Not being used to and not knowing the orders of magnitude of annual dividend yields, I am interested in your opinions 🙂
Also in a passive income strategy which consists of collecting only dividends, it seems low to me given that they are taxed at the marginal tax rate.
Thank you for your feedback.
Good day
Sebastian
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