Last updated: September 21, 2023
This chapter of our Swiss tax guide for investors will be regularly updated with answers to questions I receive from readers regarding Swiss taxes.
Irish ETF or US ETF, which is the best in terms of Swiss taxes?
This is THE big question! At least it was for me when I started investing.
Especially since the fantastic site of Bogleheads praises a lot the merits of ETFs domiciled in Ireland as a European investor…
Except that we, well, we are Swiss :D
In fact, for a Swiss investor, an ETF domiciled in Ireland is often disadvantageous compared to an ETF domiciled in the US fiscally speaking because of withholding taxes on dividends.
Indeed, as we have seen in chapter 4 (part 2), with an Irish ETF, you cannot recover the L1TW withholding tax levied by the tax authorities of foreign countries. If we take the case of an ETF with a lot of US shares (which is often the case for a Mustachian investor like you), we are still talking about 15% deducted from your dividends that you will never see again.
Whereas via a US ETF, you will not have any L1TW withholding tax (i.e. 0%!) on the US shares of an ETF.
So if you are lucky enough to have access to US securities through your online broker, then you will be better off choosing a US ETF for tax purposes. On the other hand, if your broker does not allow you to buy US securities, then your second best option as a Swiss investor will be to go with an ETF domiciled in Ireland.
This answer remains true as long as the US remains a place where the biggest worldwide business is, and Ireland does not become the country with the biggest companies in the world on its soil.
VT ETF or VWRL ETF as a Swiss investor?
With the detailed answer to the above question, it is preferable to choose the VT global ETF from a tax point of view as a Swiss investor.
And if your online broker does not allow you to buy US securities, then the VWRL ETF is the second best choice.