Withholding tax (Switzerland)

Swiss withholding tax (impôt anticipé / Verrechnungssteuer) is a 35% federal tax withheld at source on Swiss dividends, certain interest payments, and lottery winnings. It is collected by the paying entity and remitted to the Swiss Federal Tax Administration (AFC). For Swiss-resident individuals and companies, the withholding tax is fully recoverable — either through automatic refund (for Swiss corporate taxpayers) or via the income tax return (for individuals who declare the income). For non-residents, recovery depends on the applicable tax treaty between Switzerland and their country of residence.

Under the Franco-Swiss tax treaty (Convention of 9 September 1966), French residents receiving Swiss dividends can recover a portion of the withholding tax: the treaty reduces the withholding tax to 15% for portfolio dividends (shareholding below 10%) and to 5% for qualifying participations (shareholding ≥10%). The remaining 5% or 15% cannot be recovered and represents an unrecoverable tax cost. French companies holding Swiss subsidiaries can therefore significantly reduce their withholding tax burden by ensuring their participation exceeds 10%.

The withholding tax interacts critically with the Swiss capital contribution reserves (RAP/CCR): distributions from certified capital contribution reserves are exempt from Swiss withholding tax and are not taxable income for Swiss-resident individual shareholders. This exemption is one of the key reasons to maximize RAP contributions when structuring a Swiss company, particularly before large dividend distributions are planned. At Hectelion, we integrate withholding tax planning into our structuring mandates.

At Hectelion, we advise on Swiss withholding tax planning and treaty optimization in our Franco-Swiss structuring mandates.