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Swiss anticipatory (withholding) tax on capital income

The Swiss anticipatory tax (Verrechnungssteuer) is a federal tax of 35 % that the federal government levies directly at source on capital income such as interest, dividends, and lottery winnings. Anyone who correctly declares this income on their tax return gets the anticipatory tax fully refunded or credited against their own tax.

The anticipatory tax is a so-called securing tax. Its purpose is not to finally collect 35 % but to encourage the honest declaration of capital income: anyone who lists their interest and dividends in the securities schedule of the tax return gets the deducted 35 % back. Anyone who conceals it loses the money, hence the securing effect.

How it works: when a Swiss bank pays interest or a Swiss company distributes a dividend, it retains 35 % and remits it to the Federal Tax Administration. The investor therefore receives only 65 %. Via the tax return they reclaim the 35 %: for individuals resident in Switzerland this runs through the cantonal tax authority, which offsets or pays out the amount with the tax bill.

Who is affected and when: everyone with taxable capital income from Swiss sources, from a savings account with interest, to shares with a dividend, to a lottery or pools win above the exemption limit. For foreigners and foreign income, double-taxation treaties apply; the refund then runs through special procedures and is often only partly possible. Foreign income in a Swiss custody account can be claimed for credit of foreign withholding taxes via form DA-1.

What to watch for: the refund requires complete and correct declaration, "forgetting" income leads to the definitive loss of the 35 %. The refund claim also lapses (for individuals three years after the end of the calendar year in which the income fell due). Anyone holding securities should keep all the bank's tax statements (tax voucher) and enter them in the securities schedule.

A fiduciary or tax advisor prepares the securities schedule, ensures the full refund, and checks the credit via DA-1 for foreign securities. For the mere declaration of existing custody accounts, the effort usually falls within the scope of the ordinary tax return (no guarantee).

Example

A private investor in Basel owns shares in a Swiss company and receives a gross dividend of CHF 2,000. The company retains 35 %, i.e. CHF 700, as anticipatory tax and pays her CHF 1,300. On the tax return she declares the full CHF 2,000 in the securities schedule. The cantonal tax authority refunds her the CHF 700 by offsetting the amount against her tax bill.

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Frequently asked

Do I get the anticipatory tax back?

Yes, provided you live in Switzerland and fully declare the relevant capital income (interest, dividends) in the securities schedule of your tax return. The deducted 35 % is then credited or paid out. Without declaration the money is lost.

How high is the anticipatory tax and what does it apply to?

It is 35 % and is levied on Swiss capital income, mainly interest from bank balances and bonds, dividends from Swiss companies, and lottery and pools winnings above the exemption limit. The investor initially receives only 65 %.

What is the difference between anticipatory tax and withholding tax on salary?

The anticipatory tax is levied on capital income (interest, dividends) and fully refunded on correct declaration. Withholding tax at source is an income tax on the salary of certain employees and replaces ordinary assessment for them, so it is in principle definitive, not merely securing.

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