Taxation of Dividends in Switzerland: Residents, Non-Residents, and Parent Companies
Introduction: Legal and Tax Framework for the Taxation of Dividends in Switzerland
The taxation of dividends in Switzerland is governed by several key legal instruments that determine how distributions from Swiss companies are taxed based on the beneficiary’s status and residency:
- The Federal Law on Withholding Tax (LIA)
- The Federal Law on Direct Federal Tax (LIFD)
- Double Taxation Agreements (DTAs) between Switzerland and many states
- The EU Parent-Subsidiary Directive, applicable under specific conditions
When a Swiss company distributes dividends, it must generally withhold 35% of the gross amount. This withholding tax may be refunded or reduced depending on the beneficiary’s residency and status. The purpose of this mechanism is to ensure tax collection even in cases of non-declaration by the taxpayer.
Taxation of Dividends in Switzerland for Individuals
1. Beneficiary: Individual Resident in Switzerland
|
Amount Distributed |
Withholding Tax |
Refund |
Final Taxation |
|
CHF 100,000 |
CHF 35,000 |
Fully refundable via tax return |
Dividend added to taxable income and taxed progressively |
Example: Mr. Besse receives CHF 100,000 in dividends from his Swiss SA. He declares this income in his tax return. The CHF 35,000 withholding tax is refunded. He pays income tax based on his marginal tax rate. In practice, the taxation of dividends in Switzerland promotes fiscal transparency.
2. Beneficiary: Individual Resident Abroad
|
Situation |
Country with DTA |
Country without DTA |
|
WHT Rate |
15% (often) or less |
35% |
|
Refund |
Yes, via official form |
No |
|
Condition |
File with the Swiss FTA |
None – tax is lost |
Example with DTA: Ms. Garcia, resident in Spain, receives CHF 100,000 in dividends. The Switzerland–Spain DTA limits the withholding to 15%. She can claim a refund for the extra 20% withheld.
Example without DTA: Mr. Fox, resident in Monaco (no DTA with Switzerland), receives CHF 100,000. The CHF 35,000 withheld is final—highlighting the importance of a proper tax strategy.
Taxation of Dividends in Switzerland for Parent Companies
3. Beneficiary: Swiss Resident Parent Company
|
Condition |
Participation ≥ 10% |
Participation < 10% |
|
Procedure |
Notification (Art. 24 OIA) |
35% withholding applies |
|
Refund |
No withholding if accepted |
Possible later refund |
Example: A Swiss holding company owns 100% of a Swiss subsidiary. It receives CHF 500,000 in dividends. No withholding tax applies if the notification is filed. This demonstrates tax neutrality in the taxation of dividends in Switzerland within domestic corporate groups.
4. Beneficiary: Foreign Parent Company
|
Situation |
Country with DTA |
EU (Parent-Subsidiary Directive) |
No DTA |
|
WHT Rate |
15%, 5%, 0% per DTA |
0% if conditions met |
35% |
|
Condition |
Usually ≥10% shareholding |
≥25% holding, ≥2 years |
No agreement |
|
Refund |
Yes |
Yes |
No |
Example with DTA: A French company holds 20% of a Swiss company. It pays 15% withholding tax and can reclaim 20%.
Example under EU Directive: A German company owns 100% of a Swiss company for over 2 years. WHT = 0% if the Parent-Subsidiary Directive applies.
Example without DTA: A Monaco-based holding receives CHF 100,000 in dividends. CHF 35,000 is withheld and not refundable. This underscores the importance of verifying the existence of a DTA before investing.
Tax Strategy and Tailored Support
A detailed understanding of the taxation of dividends in Switzerland reveals multiple nuances based on residency, legal structure, and shareholder arrangements. Tax planning should be done in advance when incorporating the Swiss company to benefit from relief provided by international treaties or Swiss law.
My Swiss Company SA, a leading Swiss Corporate Services Provider, supports you at every step related to dividend issuance and receipt, including:
- Assessing eligibility for withholding tax reductions
- Structuring Swiss companies with foreign holdings
- Avoiding cash losses due to unrecoverable tax withholdings
- Preparing notification and refund applications
For any questions regarding the taxation of dividends in Switzerland, our experts are available for tailored guidance—in French, English, or Spanish.