Most Swiss investors think the US tax system stops at the border. You live in Zurich or Lausanne, you pay your cantonal taxes, and Washington is someone else’s problem. So when an American blog or broker tells you the cheapest way to own the world is a US-listed fund like VTI or IAU, you buy it without a second thought. But the IRS makes one quiet exception that catches Swiss savers exactly where they aren’t looking: at death. The United States levies an estate tax on “US-situs” assets held by non-Americans, and for a non-resident alien (the tax term for a foreigner like you), the exempt amount is not the multi-million figure US citizens enjoy. It is $60,000. Everything above that can be taxed at rates climbing to 40%, per the IRS’s own filing rules. The trap isn’t the stock you picked. It’s the wrapper you bought it in. Here is how it works, and the clean way out.
What “US-situs” actually means
US-situs is the IRS’s term for property it treats as located in America for estate-tax purposes, and the definition is wider than the word suggests. A share of a US company is US-situs no matter which exchange or broker you hold it through, so your Apple and Alphabet are in. More surprisingly, a US-domiciled ETF is also US-situs — and that is the line almost nobody draws. When you buy VTI, IAU, VUG, or any iShares, Vanguard, or Schwab fund that is legally organized in the United States, you are holding a US asset, even though the fund itself is just a basket. The IRS looks at where the fund lives, not where you live or what it holds.
The numbers make the exposure concrete. The IRS sets the filing threshold for a non-resident’s US-situs estate at $60,000, a figure that has sat unindexed for decades, and the rate schedule above it tops out at 40%. So picture a Swiss investor who diligently dollar- cost-averages into US-domiciled funds for twenty years and dies holding $300,000 of them. Strip out the $60,000 exemption and roughly $240,000 is exposed, which at the top rate is around $96,000 the family never sees. That is not a tax on a gain. It is a tax on the asset itself, triggered by an event you cannot reschedule, on money that was already yours.
The treaty helps, but read the fine print
There is a 1951 estate-tax treaty between Switzerland and the United States, and a US adviser will sometimes wave it at you as if it makes the problem disappear. It does not. Here is what the treaty actually does: instead of capping a Swiss decedent at the bare $60,000, it grants a pro-rata share of the much larger exemption a US citizen gets — but only the fraction equal to your US-situs assets divided by your entire worldwide estate. The mechanism is a ratio, not a gift. If your US holdings are a small slice of a large global estate, that slice is mostly shielded. But if a big share of your net worth sits in US-domiciled funds, the ratio is unkind, and you are back to a meaningful bill. The treaty scales the relief to how little of your wealth is American. It was never designed to let a Swiss investor pile everything into US wrappers tax-free.
Two cautions keep this honest. The pro-rata math depends on your total estate at the moment of death, a number nobody knows in advance, so the relief is real but not something you can bank on to a franc. And the US-citizen exemption it scales has been a moving target — about $13.99 million in 2025, lifted to $15 million for 2026 under recent US law — so the relief floats with American politics, not Swiss planning. The treaty is a cushion, not a clearance.
The same trap, on dividends
Estate tax is the dramatic version, but the same wrapper choice quietly taxes you while you’re alive, too. When a fund holding US stocks collects dividends, America withholds tax before the cash ever reaches the fund. An Irish-domiciledfund, thanks to the Ireland–US tax treaty, loses 15% of those US dividends at the fund level. A holding structured without that treaty rate loses 30% — double the leak, every year, silently netted out of your returns before you ever see a statement. On a portfolio yielding a couple of percent, that gap compounds into real money over a Swiss saver’s multi-decade horizon. The same Irish wrapper that keeps your estate out of US reach also hands you back a slice of yield each year. The fix and the bonus are the same object.
The wrapper is the fix
The clean escape is the UCITS ETF — short for Undertakings for Collective Investment in Transferable Securities, the European framework most of your familiar funds also come in, usually domiciled in Ireland. An Irish UCITS fund can hold the exact same US stocks as VTI, track the exact same index, and yet it is not US-situs, because the fund itself lives in Dublin, not Delaware. Your heirs face no US estate tax on it. Its US dividends are withheld at the treaty’s 15%, not 30%. And the accumulating share classes UCITS offers reinvest dividends internally, which suits a long Swiss hold. You give up almost nothing: the index is the same, the cost is in the same neighborhood, and these funds trade on European exchanges through Swissquote or Interactive Brokers. The American wrapper was never buying you anything a Swiss investor needs.
This is where Obermatt’s way of working and the Swiss wrapper decision sit side by side without competing. Obermatt’s job is to tell you which companies are worth owning — it ranks each stock against its true peers on a 0-to-100 scale, where a rank of 75 means the company outperforms 75% of its direct competitors on the fundamentals that matter. That is the selection question, and it is wrapper-agnostic: a great business is a great business whether you reach it through a US fund or an Irish one. The wrapper is the separate, purely Swiss question of howyou hold what you’ve chosen. Get the ranking right to decide the what; get the domicile right so the tax code doesn’t quietly claw back what the ranking earned. They are two different decisions, and a Swiss investor has to win both.
One ticker swap, not a strategy change
The principle here is small and durable: as a Swiss investor, the domicile of your fund is a tax decision in its own right, independent of which index or company you want to own. Two funds can hold identical assets and leave your family in very different places, and the only thing that changed was three letters of legal address. The concrete action is equally small. Pull up your portfolio and check the domicile of each ETF — your broker lists it, and an Irish fund’s name almost always carries the tag “UCITS.” For any US-domiciled fund you find, note the Irish equivalent tracking the same index. You don’t have to change a single conviction about what to own. You just have to stop owning it through the one wrapper that mails the IRS an invitation.