Dividend Taxation in Switzerland (2025): Rates, Refunds & Exemptions

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.

In the Swiss tax system, dividends represent a form of income distributed by a company to its shareholders out of its profits. They can be paid in cash, shares, or other assets, depending on the company’s financial results and shareholder agreements.

Dividends are typically approved during the Annual General Meeting (AGM), based on the proposal of the board of directors. The Swiss Civil Code provides detailed rules regarding dividend calculation, approval, and payment.

• Dividends must be paid only from distributable profits or reserves accumulated through retained earnings;
• Interim dividends (before year-end) may be paid only under strict conditions and with the support of audited interim financials;
• Shareholders’ rights to dividends depend on the class and number of shares held;
• Dividends are subject to withholding tax, unless an exemption or reduced rate applies under a tax treaty or domestic rule (e.g., participation exemption).

In certain cases, dividends may be reclassified as constructive dividends, particularly when benefits are transferred to shareholders without formal approval. These are still subject to full taxation and may result in additional penalties.

To ensure full compliance with Swiss dividend rules, companies must:

• Keep accurate accounting records;
• Follow corporate governance procedures;
• Apply the appropriate withholding rules and documentation.

Our Swiss tax advisors help companies navigate dividend distribution procedures while minimizing tax exposure through lawful planning tools.

The process of assessing and determining dividends in Switzerland is governed by both corporate law and accounting regulations. A company may only declare dividends after fulfilling several financial and procedural requirements.

• Dividends must not impair the company’s legal reserves or minimum share capital;
• Companies are prohibited from distributing unrealized profits or revaluation reserves as dividends;
• If the company is undergoing restructuring or has significant losses, dividend payment may be blocked.

Proper calculation and approval of dividends not only fulfill compliance duties but also help avoid requalification as hidden profit distributions, which can result in tax penalties.

Our team provides corporate accounting support, ensuring dividend proposals are legally justified and properly documented.

Switzerland applies a federal withholding tax (Verrechnungssteuer / impôt anticipé) on income from movable capital, including dividends. This tax is intended both to secure tax collection and to ensure the transparency of financial income declarations.

• Swiss resident individuals and companies may reclaim the tax in full via annual tax returns or dedicated refund forms;
• Non-resident beneficiaries may benefit from a reduced rate or refund under double taxation treaties, provided they submit a formal application with required documentation and proof of beneficial ownership;
• For parent-subsidiary relationships under EU or OECD agreements, a full exemption may apply if participation thresholds and holding periods are met.

Proper execution of withholding tax obligations helps avoid late payment penalties and interest charges. Our specialists assist clients in calculating withholding obligations, filing refund claims, and applying relevant exemptions.

Although the standard withholding tax rate on dividends in Switzerland is 35%, various reduced rates and exemptions are available through bilateral tax treaties and domestic tax provisions.

Switzerland has signed over 100 double taxation agreements (DTAs). These treaties generally lower the withholding tax rate applied to dividends paid to foreign investors, including:

1. 15%, 10%, or even 0% in the case of qualifying shareholders;

2. Preferential rates often require:

• A minimum ownership percentage (usually 10% or 25%);
• A minimum holding period (typically one year);
• Proof of beneficial ownership and tax residency.

Under Swiss domestic law, dividend payments between qualifying affiliated companies can benefit from a participation exemption, reducing the effective tax burden to zero. To qualify:

• The recipient must hold at least 10% of the share capital of the paying company;
• The participation must be held for at least one year.

This is especially relevant for group structuring and holding companies.

• Eligible foreign investors must apply for treaty benefits using the official forms provided by the Swiss tax administration;
• Applications must include certificates of residence and ownership documentation;
• Swiss authorities usually process claims within 6 to 12 months.

Our firm helps clients understand whether they qualify for reduced rates and supports all stages of application, documentation, and refund claims.

Although Switzerland is not a member of the European Union, it has signed a number of bilateral agreements with the EU, including provisions relevant to dividend taxation under the Parent-Subsidiary Directive framework.

The Switzerland-EU agreement mirrors many elements of the EU directive but is applied through bilateral administrative procedures rather than directly.

Our Swiss-EU tax specialists assist in:

• Evaluating whether your corporate group qualifies for exemption;
• Preparing necessary tax forms and declarations;
• Communicating with tax authorities on your behalf.

Swiss holding companies benefit from specific legal and tax rules when it comes to receiving and distributing dividends. These companies are often used as intermediate entities for managing group assets and cash flows in a tax-efficient way.

1. A Swiss holding company is defined as a company whose primary purpose is to manage long-term equity investments and which derives at least two-thirds of its income from participations;

2. At the cantonal level, holding companies may benefit from preferential tax regimes, including exemptions from cantonal and communal income tax (though capital tax still applies);

3. Dividends received by the holding company may be exempt from federal tax under the participation exemption, provided:

• The company owns at least 10% of the share capital of the distributing entity, or;
• The investment has a market value of CHF 1 million or more.

• When a Swiss holding company distributes dividends to foreign parent entities or shareholders, withholding tax applies unless a treaty exemption or EU directive-based relief is in place;
• The company must comply with reporting and documentation requirements to claim treaty benefits or refunds.

Our corporate tax specialists provide full support for:

• Holding company formation and structuring;
• Application of federal and cantonal participation exemptions;
• Withholding tax optimization on outbound dividends;
• Maintaining tax-compliant dividend strategies.

→ Continued in part 8...

In Switzerland, natural persons (individuals) who receive dividends are subject to income tax on this type of revenue. The tax treatment depends on their residency status and the source of the dividends.

• Swiss residents are also subject to cantonal wealth tax, which includes shareholdings and investments, including those that generate dividend income.

Our tax advisors assist individuals in:

• Filing income and wealth tax declarations;
• Claiming withholding tax refunds (for both residents and non-residents);
• Structuring investments for dividend efficiency and compliance.