Similar to other European jurisdictions,
Switzerland imposes withholding taxes on specific types of income earned by individuals and companies. What sets the Swiss tax system apart is its
three-level structure — encompassing
federal, cantonal, and municipal taxation.
One of the most relevant levies is the
withholding tax, which applies to:
- Dividends;
- Interest payments;
- Royalties.
This tax is imposed on both Swiss-based and foreign entities that pay or receive such types of income in Switzerland. The
standard withholding tax rate on dividends is
35%. However, due to the country’s extensive
network of double tax treaties,
reduced rates or full exemptions are frequently available.
To avoid
double taxation, companies and individuals may apply for a
refund or credit for the amount exceeding the residual withholding tax in accordance with treaty terms. Special exemptions may apply if the dividend recipient is a
foreign government, as stated in several bilateral agreements.
It is important to note that
only corporate bodies — such as limited liability companies or stock corporations — are eligible for exemptions or deductions under Swiss dividend tax rules.
Partnerships are not covered by these relief measures.
If you're considering
starting a business in Switzerland, our specialists can guide you in selecting the most tax-efficient legal form.