Switzerland is known for its robust and transparent financial system, and part of that system includes the automatic withholding of taxes on certain types of income, such as dividends and interest. This mechanism ensures tax compliance at the source but can often lead to excess tax being withheld—particularly for resident taxpayers and foreign investors eligible for treaty relief. Fortunately, the Swiss tax system offers pathways to reclaim such withheld amounts. This detailed guide explains how to file a refund request for Swiss withholding tax on dividends or interest income, both for residents and non-residents.
What Is Withholding Tax in Switzerland?
Withholding tax, or Verrechnungssteuer in German, is a federal tax levied on certain types of income, primarily:
- Dividends from Swiss companies
- Interest from Swiss bonds and bank accounts
- Lottery and gambling winnings
The standard withholding tax rate is 35%, which is deducted at the source before the payment reaches the recipient. The primary purpose of this tax is to prevent tax evasion. If the income is declared correctly, this tax is either refunded or credited.
Who Can Request a Refund?
The eligibility for reclaiming Swiss withholding tax depends on your tax residency:
- Swiss Residents: If you correctly declare the income on your tax return, the withholding tax will typically be refunded or credited against your total tax liability.
- Foreign Residents: You may be eligible for a partial or full refund under a double taxation agreement (DTA) between Switzerland and your country of residence.
In either case, submitting the appropriate documentation within the correct timeframe is essential to receive the refund.
Steps for Swiss Residents
If you are a Swiss tax resident, reclaiming withheld tax on dividends or interest is straightforward. Here’s how:
1. Declare the Income on Your Tax Return
All dividend and interest income subject to withholding tax must be declared in your annual tax return. Include:
- Gross amount received
- Name of the paying company or bank
- Date and amount of payment
2. Provide Evidence of Withholding
You must include the official tax certificate (Steuerausweis) or bank statement confirming the amount withheld.
3. Receive the Refund Automatically
If everything is correctly declared and documented, the tax authority will refund the withheld amount as part of your tax assessment. The refund is typically credited to your bank account after final tax assessment.
Steps for Non-Residents
For foreign individuals or entities, the process is more complex and depends on tax treaties. Here’s how non-residents can request a refund:
1. Check Your Country’s DTA with Switzerland
Switzerland has DTAs with many countries, which typically reduce the withholding rate to 15%, 10%, or even 0%. You can find this information on the Swiss Federal Tax Administration (FTA) website.
2. Obtain and Complete the Correct Form
Use the official form “Form 82” or “Form 85” depending on your situation:
- Form 82: For individuals
- Form 85: For companies or entities
You can download these forms from the Swiss FTA website.
3. Provide the Following Documents
- Proof of income (dividend or interest statement)
- Tax certificate from the Swiss paying agent or financial institution
- Certificate of tax residency from your local tax authority
- Copy of the DTA clause applicable to your claim (if necessary)
4. Submit the Application to the Swiss FTA
Once the form is completed and certified by your home tax authority, it should be sent to:
Swiss Federal Tax Administration (SFTA)
Eigerstrasse 65
3003 Bern
Switzerland
Submission must be made within three years from the end of the calendar year in which the withholding tax was deducted.
Important Timelines
- For Residents: File as part of the annual tax return (by March 31 or with extension)
- For Non-Residents: Refund request must be submitted within 3 years from the end of the tax year
Common Mistakes to Avoid
- Failing to declare the gross income in your tax return
- Submitting expired or incomplete forms
- Missing the 3-year refund claim deadline
- Not obtaining proper tax residency certification
- Assuming refunds are automatic for non-residents
Practical Example
Let’s say you are a resident of Germany and receive CHF 1,000 in dividends from a Swiss company. CHF 350 (35%) is withheld. Under the Switzerland-Germany DTA, only 15% should be withheld. You can claim a refund of CHF 200 by submitting Form 85, along with a residency certificate and tax certificate from your bank, to the SFTA within three years.
Use of Tax Advisors
For individuals or companies with high-volume dividend or interest income, or cross-border investment structures, engaging a Swiss tax consultant or international tax advisor can help streamline the process and ensure compliance with treaty conditions.
Conclusion
Withholding tax on dividends and interest in Switzerland is designed to ensure tax transparency, but it doesn’t have to mean the end of your income. Whether you’re a Swiss resident or an international investor, the legal mechanisms for reclaiming this tax are well-established, though often underutilized. By understanding the eligibility criteria, preparing accurate documentation, and adhering to deadlines, you can recover what’s rightfully yours—improving your investment yield or reducing your overall tax burden.
Make sure to file your refund request promptly, and when in doubt, consult a tax expert to help guide your claim through Switzerland’s structured but sometimes complex tax system.