Withholding tax

A federal withholding tax is levied at source on the gross amount of dividend distributions by Swiss companies, on income from bonds and similar indebtedness by Swiss issuers, as well as on certain distributions of income by Swiss investment funds and interest payments on deposits with Swiss banking establishments. Lottery gains and insurance benefits are subject to withholding tax as well.

Generally, the debtor is liable for the tax and is required to withhold the amount due, irrespective of whether the recipient is entitled to a full or partial refund. Refund is only possible provided that the respective earnings are properly declared for the purposes of income taxation. The aim is to prevent tax evasion. For Swiss resident corporate taxpayers withholding tax is reimbursed by way of refund, whereas for individuals the tax is credited against total tax liability through the regular taxation procedure.

For non-resident taxpayers, the withholding tax represents a final tax burden. However, partial or total refund may be granted based on an international double tax treaty or a bilateral agreement concluded by Switzerland with the country in which the recipient of the earnings is residing.

It should further be noted that a notification procedure may be applied for certain qualifying dividend distributions replacing the withholding and refund procedure.