WITHHOLDING TAX

The pool solution for grant-making foundations includes the concept of a foundation-specific index solution, something that banks in Switzerland have seldom offered to date. This solution makes it possible to reclaim (or not pay in the first place) withholding tax on interest and dividend income which up to now was often «lost». Simply making full use of the Swiss-US double taxation convention for foundations with a majority of beneficiaries domiciled in Switzerland increases after-tax returns on global equities by about 0.15 % a year.

Tranches have been set up that have either full, 50 % or no US withholding tax liability, and either with or without currency hedging. Grant-making foundations have varying degrees of liability as follows:
  • No tax liability: Grant-making foundations that are expressly exempted by the US tax authorities (plus pension funds)
  • 50 % tax liability: Grant-making foundations where the majority of the support funds are distributed to Swiss-domiciled beneficiaries.
  • Full tax liability: Grant-making foundations where the majority of the support funds are distributed to non Swiss-domiciled beneficiaries.