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Hi,
Have you added the "net asset value" section since the 2018 tutorial?
Yes indeed, I modified the tutorial in this sense
a) After testing, this Net Assets section includes "Accumulated Interest" and "Accumulated Dividends" in the total (+ Cash and Shares, therefore). Accumulated Dividends corresponds, unless I am mistaken, to dividends awaiting payment (bad translation?).
yes these are the dividends waiting to be paid
b) Are the sections “Open Positions” and especially “Forex Balances” really necessary if at all?
I put them in the light of what is done for traditional tax statements
In the IBKR report customization, under "Section Configurations", the option "Hide details for positions, transactions and client fees sections?" = Yes, by default. Is this a new option that you leave on Yes, compared to the 2018 instructions, or are these details required by the tax authorities? (Or kept for security)
I leave it at no, for the same reasons as before.
My tax software, in the DA-1 form, asks me for additional information. In point 3. "Income on the basis of which the tax rate due for the tax year (2022) is determined according to the tax return:", there is a field for the IFD and for the ICC. I assume that this is the taxable income calculated by the software. But I don't quite understand why I should enter it myself here since I'm not supposed to know the figures at this stage... What about it? Can we leave it blank? (the software doesn't complain)
I don't have this on VStax. I have a section to fill in for deductions on cantonal and municipal tax (point 5) and point 6, for federal tax is grayed out ("established by the tax authority").
A++
I wonder if this is a bug because having read the information regarding this restriction it concerns "retail customers in the EEA and the United Kingdom"
This therefore corresponds in fact to the restrictions encountered by European investors, several of whom have already spoken to me about these problems.
So a priori, Switzerland should not be affected, so I will write to them about this too.
This reminds me of the restrictions that are imposed on European investors on American ETFs. Until now, we in Switzerland had been spared this two-bit protectionism.
I'll see what's going on.
In the meantime, you must use equivalent ETFs domiciled in Europe, see here: https://www.dividendes.ch/2020/12/portefeuille-determinant-acheter-bitcoin/
subparagraph “ETFs”
If you have any live information from IB, I'd be happy to share it 😉
Hi Sebastian,
your question is timely, since I am in the process of writing my monthly PF review article, which talks about the recent surge of the Swiss franc, in particular vs the dollar and the yen. I will let you read this post at the beginning of May for the details, but in short, short-term currency fluctuations tend to be offset in the medium/long term by the intrinsic value of assets. This is what I talk about in my book. The excellent book by J. Siegel also mentions this phenomenon.
To avoid these short-term fluctuations, you have to borrow in the currency of the asset, but in doing so you have to pay interest. If you have a margin account on IB for example, this is done automatically. I have already read quite a bit on the subject and I have come to the conclusion that hedging against currencies is not necessary, or even counterproductive.
See also the very clear article by Quant Investing about this.
Hi,
Yes, this is quite normal. Dividend yields are very low on indices for several reasons:
– historically, yields have been declining for several decades, with companies preferring to keep their profits to ensure their growth, buy back their shares or repay their debt and shareholders preferring, for tax reasons, to benefit from a rise in the share price rather than an income in hard cash
– valuations, despite the correction that began last year, still remain very high, which is dragging down dividend yields
– indices, especially the S&P 500, are currently over-represented by techs, due to long years of easy money initiated by central banks. Techs are generally quite stingy with dividends
The determining PF is obviously much more generous in dividends, since it is largely made up of undervalued shares.
And finally, you are right, a passive income strategy that consists of collecting dividends (in particular on an index ETF) is largely a losing one in this context, especially, as you say, since they are taxed. This is also one of the points that I raise in my book.
It is better to add to these dividends a risk-free withdrawal rate of capital AND to favor the purchase of undervalued stocks. This does not mean that index ETFs should be completely abandoned, but they must first and foremost be used as part of an asset allocation aimed at diversifying your investments.
Hi,
Your method seems correct to me, although more laborious.
I have been doing this for several years and I have never had any problems with my tax authorities. That being said, I imagine that it can vary from one canton to another and even from one tax collector to another... Keep us informed in any case, it is always interesting to have feedback on this subject.
In addition, I would say that from a tax point of view, even if I am not in the head of a tax official, it seems to me that passing on a single line on DA-1 the US, foreign and Swiss securities, held by a foreign broker, and therefore not taxed with Swiss withholding tax or additional withholding tax in Switzerland (USA), makes sense, since the only withholding tax corresponds to “the imputation of foreign tax deducted at source”.
I am taxed on income based on the returns raw, i.e. before withholding tax on the dividend. Then, the withholding tax (CH withholding tax, request for reimbursement of the additional withholding tax USA and request for flat-rate imputation) are considered according to the tax software provided by my canton as withholding tax, already paid, which is subtracted from the tax to be paid during the annual taxation.
I must say that I never bothered to check on the actual tax bill whether the amount deducted, relating to this withholding tax, corresponded exactly to the deductions on dividends. The amount seemed to me to be sufficiently substantial at first glance and so I never pushed the analysis further. It must be said that these tax issues have never really interested me. I will do so during the next taxation, just to be sure.
Hi,
Why is there a difference between foreign withholding tax on US divi, and additional US withholding, withholding tax, but only by a Swiss depository (which excludes IB)? Does money smell different depending on whether it comes from Switzerland or elsewhere?
That's a damn good question and I've asked myself it many times too... We should ask it to our legislators. We should never underestimate fiscal fantasy!
Can we avoid double taxation in both cases, US and CH?
Yes. Whether it is a flat-rate tax deduction or an additional US withholding tax, it is considered a Swiss withholding tax and is deducted from what you have to pay during the annual tax assessment.
I have a friend who says that it is only the deduction made by a Swiss depositary that applies as a deduction from Swiss tax. If this is true, the 15% tax deducted at source by IB becomes a simple operating expense, and Switzerland taxes on the remaining 85%, without taking into account the Tax Convention to avoid double taxation.
I pass the dividend raw foreigner by indicating the 15% retained by IB in the flat-rate imputation and this amount is deducted from what I have to pay during the annual taxation.
From 2009 to early 2022, you could invest randomly and win every time, thanks to the easy money policy implemented by central banks. But that's not economic and financial normality. From now on, money is earned again and that's not so bad, even if it causes damage in the process.
This is tactical asset allocation, so no b&h. I explain why in my book. The only position I held in b&h was real estate until recently. The latter historically offers fairly stable returns, so tactical allocation does not bring a big plus. On the other hand, it allows to reduce volatility. This is the reason why now all my PF is in tactical allocation, including real estate.
World ETF: this would be redundant and would therefore not help diversify the PF. A world ETF is made up of a very large majority of American big caps and the remaining bits and pieces are shared by the big caps of other developed countries. The correlation between the S&P 500 and VT is for example 0.96. In other words, it is the same thing…
The stocks/ETFs I currently have I either bought because I believe to future performance (e.g. ETF on renewable energies), either because the price has fallen sharply and I think that it will go back up at some point (example: Alibaba).
Be careful with beliefs 🙂 It doesn't always go the way you think. Or it can take much longer than expected. That's why I don't buy a falling knife, like Alibaba. More info in my book. It's better to base yourself on facts: what's happening with the data that is known today.
Hello,
Thank you for registering. For future messages regarding the PF, post directly in the members area of the forum. You have access to it.
Here are my answers:
for the target in % on the right, we are talking about the % of an asset compared to the total of the PF? So if my PF is at 10k and the target of the US stocks is at 12% (stocks and/or ETF), I must total 1200 balls for this asset?
Exact.
– when you say “lightened in action”: we just follow your sales positions (which may be out of sync)?
Exactly. I wouldn't make a purchase in that case anyway.
Regarding ETFs, example of CSSX5E at 1/10: so I do nothing here? I do not sell or buy? But which % of my PF should correspond to this asset then? 0%? So it is possible that I do not have any European ETF (or shares) in my PF?
Nothing to do, unless you were long on this index, in which case sell. And yes, that will make zero percent target, so no more ETF and for the stock that was still there I posted a change this morning.
– How to short an ETF on DeGiro?
You must have an Active or Trader account. If you have a Basic account, you can upgrade it under your trading settings. If you have a Custody account, this is not possible. You must create a new account.
– On my current PF, I have several stocks (and ETFs) currently in loss, what do you advise me? Keep them and wait until I am positive again or sell anyway?
It’s hard to answer like that… why did you buy them and are those reasons still valid?
Also, in order to easily manage my PF, do you have a tool that directly calculates the % of each asset or do you do this manually with Excel for example?
Excel!
