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Mischa Barmettler

Withholding Tax

Why 35% of Swiss dividends and bond interest is held back before you receive it, how you get it back through your tax return, and why foreign withholding tax is harder.

Key idea

Withholding tax is deducted at source: the company pays part of your dividend straight to the tax office, and you receive the rest. In Switzerland it's 35%. Swiss residents get it back by declaring the shares and the income in their tax return, so it's less a cost than a deposit that makes sure the income is declared.

What it is

A withholding tax is deducted at source: whoever owes the income, such as the company paying a dividend, sends part of it straight to the tax authority, and you receive the rest. In Switzerland this is the federal withholding tax: under the Withholding Tax Act, 35% in 2026 on dividends from Swiss companies and on interest from Swiss bonds. Many other countries also deduct tax from dividends paid to investors abroad.

A CHF 1,000 dividend

Say a Swiss company pays you a dividend of CHF 1,000. Here's what happens to it:

A CHF 1,000 dividend from a Swiss company

  1. Dividend declared

    CHF 1,000.00

  2. Paid into your account

    CHF 650.00

    and

    Withheld for the tax office

    CHF 350.00

    35% withholding tax

  3. Refunded after your tax return

    CHF 350.00

    once you declare the shares and the dividend

  4. In total

    CHF 1,000.00

    taxed as income at your normal rate

You see CHF 650 arrive, and the other CHF 350 comes back after the end of the year, through your tax return, if you declare both the shares and the dividend. The withholding tax is a deposit, not the tax itself: the full CHF 1,000 still counts as income and is taxed at your normal rate, like your salary.

Three things to know

From the deduction to getting it back:

Swiss withholding tax (35%)

Usually deducted from the dividends of Swiss companies and the interest on Swiss bonds before the money reaches you.

Foreign withholding tax

Many countries tax dividends paid abroad at their own rate. A tax treaty with Switzerland often lowers it.

Reclaiming

Swiss residents get the Swiss 35% back in full through their tax return. Foreign tax is harder to recover.

A US dividend shows how foreign tax works. Say a US company pays you a dividend worth CHF 1,000 into an account at a Swiss bank. The United States keeps 15%, CHF 150, the most its tax treaty with Switzerland allows. If the Swiss bank is a Qualified Intermediary, with an agreement with the US tax authority, it holds back another CHF 150, an additional retention that works like Swiss withholding tax, so CHF 700 arrives. You declare the full CHF 1,000 as income. The extra CHF 150 comes back with your tax return, on form R-US 164. The US CHF 150 can be credited against your Swiss tax on form DA-1, but only if the non-refundable withholding taxes from treaty countries add up to more than CHF 100 over the year, and never for more than the Swiss tax on that income.

The honest caveat

Getting the Swiss 35% back is routine. Foreign withholding tax is different: how much you can recover depends on the tax treaty between Switzerland and the country that withheld it. If they total CHF 100 or less over the year, nothing is credited, and the credit never exceeds the Swiss tax on that income, so some of it is often lost for good.

Funds add another layer, whether they pay out their income or reinvest it (see accumulating vs distributing). When a fund holds foreign shares, foreign tax is often deducted inside the fund, before anything reaches you. How much of it can be recovered depends on where the fund is based and on the tax treaties involved. What isn't recovered lowers the fund's income, and it doesn't show up in the fund's total expense ratio (TER), which counts only its running costs.

Swiss note

To get the 35% back, list your securities and the income they paid in the securities list (Wertschriftenverzeichnis) of your tax return. The canton refunds the withholding tax or, as a rule, deducts it from the taxes you owe. If you don't declare the income or the securities, the refund is generally lost. Since 2019 an honest mistake no longer costs it, if you declare the income later or the tax office adds it itself, before the assessment, revision or back-tax procedure is final. That's the point of the tax: it makes declaring your savings worthwhile.

Key takeaways

  • —Swiss dividends and bond interest usually arrive with 35% already deducted.
  • —Swiss residents get the full 35% back by declaring the securities and the income in their tax return.
  • —Forget to declare them and the refund is generally lost.
  • —Foreign withholding tax is only partly recoverable, depending on the tax treaty with Switzerland.

Related concepts

Dividend

Part of a company's profit, paid out in cash to its owners.

Bond

Lend money, collect interest, get your principal back.

Stamp Duty (Umsatzabgabe)

The small federal tax on trades through a Swiss bank.

Total Return

Price change plus dividends: the whole return, and what the SMI leaves out.

Accumulating vs Distributing ETFs

Paid out or reinvested: what a fund does with its income, and how it's taxed.