Swiss Witholding Tax

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28th Jan '21 by Wayneskie

16 comments 1632 reads

So today Ferrexpo (LON:FXPO) paid a dividend of 9.7P subject to Swiss Withholding tax.

After further reading it transpires that due to the 'Double Tax Treaty' with the UK and Switzerland if 'MAY' be possible to reclaim 4/7th leaving a tax of 15%.

I hold within an AJ Bell SIPP. I just called AJ Bell and they say it is a service they do not offer, I would have to arrange this myself.

Does anybody have any experience of this?

Any pointers where to start?

It's not a major amount of money, but I'll have it if I can Obvs.....

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About the Author

Wayneskie

Premium Member

16 comments

willhampson

28th Jan '21

Hi Wayneskie, Ferrexpo (LON:FXPO) itself does give some guidance on this if you look at the dividend letters in the investors relations part of the website. I'm trying to attach a link, but it doesnt seem to work so as an alternative just google "ferrexpo dividend letter" and its the first hit. It's quite a lot of paperwork you need to complete.

My understanding is that you can't reclaim foreign WHT in a SIPP without the help of your SIPP administrator. AJ Bell offer this for recovering U.S. WHT, but I don't think they bother for other countries and it sounds like they fobbed you off re Switzerland. So I think you are out of luck unfortunately, but hopefully someone else will correct me.

ezlifeme

28th Jan '21

Afraid their website seems to make it quite clear

We don’t offer a foreign withholding tax reclaim service. However, to deal in North American investments, you have to complete a W-8BEN form (for US investments) and NR301 form (for Canadian investments). These forms allow you to benefit from the lower ‘treaty’ rate of withholding tax.

https://www.youinvest.co.uk/fa...

Vsihv

28th Jan '21

UK pensions are accredited scheme in US so don't attract withholding tax (yet) - nothing to reclaim. Same would apply to holdings in Spectra / Somero (US based UK listed)

willhampson

28th Jan '21

Thanks. Yes, but there is a process that the SIPP administrator needs to complete for this to occur for U.S. WHT purposes. Some SIPP providers do it (AJ Bell / HL) others do not in which case you would be missing out on a lucrative benefit under the UK-US tax treaty. So it is not automatic in all cases and something to research before choosing a SIPP provider.

On the original poster's question, it seems clear that AJ Bell (as SIPP administrator) will not make the claim for a partial refund of Swiss WHT so its not possible to claim that back. In an ISA/Cash account, the position is different and a personal reclaim could in theory be submitted, though the paperwork may make that not worthwhile unless for a significant amount.

Wayneskie

28th Jan '21

Sure, I have found this from Ferrexpo (LON:FXPO) , unfortunately AJ Bell won't play ball.

Wayneskie

28th Jan '21

Ahh, that's quite clear. I have obviously done the W-8BEN form since I do hold a couple of US Stocks. I didn't quite sus the first bit though.... ah well...

ezlifeme

28th Jan '21

Wayneskie you are most welcome - I'm now an old pedant I'm afraid having not read and understood small print to my cost when younger ! PAIN - best way to learn

Vsihv

28th Jan '21

Thanks Will - I didn't know that it was based on SIPP provider. I use III and they did it so assumed it was across the board.

Thanks.

joshwood976

28th Jan '21

Slightly Separate, but what are your thoughts on the recent decline? do you continue to hold FXPO?

Roodini

31st Jan '22

My learnings from Ferrexpo (LON:FXPO) and Swiss withholding tax are this. If Im not correct here then please let me know.

The Swiss withholding tax is 35%. In most cases you can claim back 20% (see below) but they keep 15% - This 15% you can (in theory - see below) put on your tax assessment and offset it against your dividend taxes paid in the UK

The forms for claiming back some of the Swiss witholding tax ( at 35%) are here:

Withholding tax - forms to reclaim

The following is my opinion having learnt all this recently!

SIPPS / Pension in the UKs -

Dont hold the Shares in SIPP/Pension. Legally only the SIPP administrator is supposed to reclaim the tax and unless your SIPP provider will do this - YOU can't. Most SIPP Pension providers seem ONLY to reclaim USA withholding taxes.
Hence in my case, its not worth taking up your UK Pension allowance buying such shares , unless you don't intend to reclaim the tax.

ISAs - These are UK tax free savings accounts. The Swiss do not care if they are "Tax free" in the UK.

While technically you could still reclaim 20%, my broker (interactive investor) does NOT produce a "Consolidated Tax Certificate Form" for ISA accounts. You need this form to submit to the Swiss to reclaim the 20% ( ie you need it to prove you received the dividends minus the withholding tax)
Also, without the Tax form, you will not be able to offset remaining 15% on your Self Assessment form either!
Im not even sure you can enter on the UK self assessment tax paid on foreign shares, held within an ISA....need to check this....!!
Hence in my case, its not worth taking up the UK ISA allowance buying such shares, unless you don't intend to reclaim the tax

Normal trading Accounts

In these accounts you should be able to reclaim the 20% withholding tax and then use the 15% on your UK tax forms, but it is going to take a lot of time.

this is taken from the Swiss forms I linked to above.

"UK resident shareholders
Three copies of Swiss tax Form 86, duly completed and signed, must be sent to the to the tax office in the United Kingdom to whom your income tax return is made (or to the tax office for the district in which you reside, if you have not made such a return). The tax office has to certify the forms and the claimant shall subsequently send the first two copies of the claim to the Federal Tax Administration of Switzerland, Eigerstrasse 65, CH 3003 Berne, Switzerland, no later than 31 December of the third year following the calendar year in which the dividend became due. Rights to repayment arising in one calendar year must be claimed in a single claim."

Antehelion

28th Jun '22

just bringing this up to the top in case anyone else got stung by this recently (I got my AJ Bell dividend today with its pound of flesh removed..)

Metatron

28th Jun '22

Would recommend Singapore listed firms for foreign dividends as Singapore has no tax on dividends although if the Singapore listing is not the primary listing as with Ferrexpo and the UK then you will besubject to the dividend tax of the primary listing.I hold Singapore listed Boustead,Jardine, Low Keng Huat, Starhub

Roodini

30th Jun '22

as the share price drops to the value of the Div (more or less) I have put alerts to sell the shares just prior and then buy them back after.

doctor dave

30th Jun '22

Cunning Swiss move given that Ferrexpo operates in Ukraine and just has offices in Switzerland. No wonder the Swiss do so well financially - they know it is hard work to reclaim tax taken off dividends and that the majority of holders (myself included) will not bother…..

robmahan

18th Aug '22

I actually managed to claim my withholding tax back - key issue is you need to be with a broker that gives you a certificate IG do. Given the hassle its probably better to leave it to the institutions, sell before the dividend and buy back after...

Nick Jacobs

19th Aug '22

The hassle of having to file forms to reclaim the tax is the reason I do not invest on SIX. It's a pity because the Swiss market is probably the second-best-regulated in the world after the US (maybe 2nd= with Singapore, but SIX is bigger and more liquid than SGX).

Dividends are an important part of total return. There's some research somewhere purporting to show that, over a long period, if you discount selling prices to account for inflation, the return you get on a diversified portfolio is basically just the dividends. (That conclusion probably depends on the time frame chosen and sorry, no, I don't have a link.)

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Swiss Witholding Tax

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Wayneskie

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