Switzerland’s 35% withholding tax on income from Swiss securities is often overlooked by foreign investors, yet it can significantly impact investment returns. This tax, which applies to dividends, bond interest, and income from Swiss collective investment schemes (CIS), is one of the Swiss government's largest revenue streams. While Swiss residents can typically reclaim this tax, foreign investors often fail to do so effectively, leaving substantial sums unrecovered.
Who is affected and what is taxed?
Swiss withholding tax is levied on:
• Dividends from Swiss companies
• Interest on Swiss bonds
• Income from Swiss CIS, especially those classified as "transparent" for tax purposes
Capital gains and income from direct real estate investments held within CIS may be exempt, provided they meet strict accounting and distribution requirements.
The cost of inaction
Without proper planning, foreign investors, whether private individuals or global funds, may permanently lose part of their income to Swiss tax authorities. This loss is often due to:
• Lack of awareness about double taxation treaties (DTTs)
• Failure to file timely refund claims
• Misclassification of income or incorrect documentation
Leveraging tax treaties and reclaim processes
Switzerland has an extensive network of DTTs that can reduce the withholding tax rate significantly, in some cases to as low as 15% or less. However, investors must actively apply for a refund using specific forms and documentation. The reclaim process can be time-consuming and technical, often requiring local representation.
Exemptions and strategic solutions
In certain cases, foreign investors can avoid withholding tax altogether:
• Swiss CIS that earn at least 80% of their income from foreign sources can apply the "affidavit" procedure to exempt non-resident investors
• Fiduciary deposits and treaty-based planning can also mitigate tax exposure
How Alpadis can help
At Alpadis, we support clients across Asia, the Middle East, and Europe in navigating complex cross-border tax landscapes. Our fiduciary experts advise on:
• Investment structuring to minimise Swiss tax leakage
• Reclaiming withholding tax through treaty benefits
• Compliance with Swiss tax and reporting obligations
Whether you are managing a family office, institutional fund, or personal investment portfolio, we ensure your Swiss exposure is handled efficiently and proactively.
