Swiss shares- buy the US ADR or native on SIX?

hoc

Which would you buy and why? I can buy into either SIPP or ISA if one offers significant benefit over other.



These are big firms and trading volume is high on both indexes, in some cases higher in native Switzerland and in others higher in the USA.


From a brief search it seems Swiss listed offers no WHT benefit and is apparently overly bureaucratic. By comparison I have already done necessary paperwork to buy US shares although obviously with ADR the WHT isn't reduced.

hoc

No love for Swiss shares?

grey_gym_sock

some discussion of swiss withholding tax (possibility of paying less or reclaiming some of it) here:

https://the-international-investor.com/investment-faq/reclaim-withholding-tax-foreign-dividends-isa-sipp
https://the-international-investor.com/investment-faq/reclaiming-withholding-tax-foreign-dividends

hoc

grey_gym_sock wrote: »

some discussion of swiss withholding tax (possibility of paying less or reclaiming some of it) here:

https://the-international-investor.com/investment-faq/reclaim-withholding-tax-foreign-dividends-isa-sipp
https://the-international-investor.com/investment-faq/reclaiming-withholding-tax-foreign-dividends

Yes, I had already bookmarked those, but reading them now they don't tell me anything new. WHT can be reduced from 35% to 15% for Swiss listed but it is rather bureaucratic as mentioned and that site omits the fact W8BEN's reduction of WHT from 30% to 15% for US listed does not apply to ADRs.


Buying Swiss listed into SIPP and doing the form would be most tax efficient but is it worth it? The link to the form is dead and the official site only has some obscure format (QDF) intended to be completed with special software. Bureaucratic indeed.

grey_gym_sock

i think the-international-investor was suggesting that in a SIPP, you don't even have the choice of following the swiss procedure to reclaim WHT. because only your SIPP provider is allowed to do that. so either they do it for you, or, more likely, they don't bother.

but with an ISA, you might at least have the choice of attempting it yourself.

if this was me, this would probably be putting me off the idea of buying individual swiss shares

hoc

grey_gym_sock wrote: »

i think the-international-investor was suggesting that in a SIPP, you don't even have the choice of following the swiss procedure to reclaim WHT. because only your SIPP provider is allowed to do that. so either they do it for you, or, more likely, they don't bother.

but with an ISA, you might at least have the choice of attempting it yourself.

if this was me, this would probably be putting me off the idea of buying individual swiss shares

I missed that nuance, thanks. Actually, now that I think about it I remember I knew about this before during previous research. Anyway, checking with my dealer AJ Bell confirms they only do WHT for US and Canada, nothing else - https://www.youinvest.co.uk/faq/do-you-reclaim-withholding-tax-overseas-dividends


So with SIPP there would be no WHT reduction. Assuming I could hold the US ADR dividends would be taxed at 30%, if the ADR isn't allowed then it would be the Swiss listed at 35%.


A reduction from 35% to 15% for Swiss listed would be worth the trouble of doing the additional paperwork as the saving would be several hundred a year. I will have to look more into this and hopefully track down a form in a format I can open. The Swiss seem to have WHT treaties with every country under the sun - http://www.taxsummaries.pwc.com/uk/taxsummaries/wwts.nsf/ID/Switzerland-Corporate-Withholding-taxes - I searched for others besides form 86 required for UK residents like form 82-I for US residents but again couldn't find a simple PDF. I will have to convert QDF to take a look at what is required.

kidmugsy

What happens if one buys shares in an ETF based in Ireland? Does the ETF claim back part/all of the WHT on the dividends of its holdings? Would that be a better bet for many investors?

grey_gym_sock

kidmugsy wrote: »

What happens if one buys shares in an ETF based in Ireland? Does the ETF claim back part/all of the WHT on the dividends of its holdings? Would that be a better bet for many investors?

presumably the ETF will reclaim whatever it's entitled to, as an irish vehicle. and similarly, a UK domiciled fund will reclaim whatever it can reclaim as a UK entity.

whether what can be reclaimed from switzerland is the same in ireland and UK, i'm not 100% sure. (as a comparison, for US shares i believe it is the same: i.e. both irish and UK entities can get US withholding tax reduced from 30% to 15%.)

collective vehicles are the best approach for most people. i assume that hoc is considering this route because they want to buy some specific swiss shares, not for tax reasons.

hoc

My second link has the table listing the countries with which Switzerland has treaties in place to reduce WHT. Ireland is 15% just like UK, this is because CH has a treaty at the EU level which then filters down to individual EU countries, that is why all EU countries have an asterisk next to them explaining at the bottom. After Brexit, UK's may change, who knows.



ETFs are a different story. In some countries e.g. USA, ETFs are preferable over funds specifically due to tax benefits in general, not just WHT. For UK/Ireland it is a longer story. Many "UK ETFs" are actually domiciled in Ireland. The important thing to do is to check the tax status in the prospectus/KIID, it should say "reporting" against UK, that's the best you can do to make sure it is as tax efficient as possible.



But, yes, anyway I will be buying specific Swiss shares into tax wrapper accounts in UK and I want to minimise any unnecessary foreign withholding tax loss on dividends. ETFs aren't relevant in this scenario.

hoc

Giving up on this. Tried installing the viewer for QFD files but it then needs JRE installed as well. Sod that.