​ ​ ​ ​ ​ ​ Verrechnungssteuer

What is Verrechnungssteuer / Impôt anticipé?

Verrechnungssteuer (German) or Impôt anticipé (French) refers to the Swiss withholding tax, a key component of Switzerland’s tax system. It is a federal tax levied at source on specific types of income—primarily from capital investments such as dividends, interest, and certain insurance benefits. The tax applies to both individuals and legal entities earning qualifying income within Switzerland.

Its main purpose is to ensure transparency and proper income declaration while serving as a mechanism to combat tax evasion.

Key Features of the Withholding Tax

Levied at Source

The tax is withheld directly at the source, meaning the payer of the income deducts the tax before transferring the funds to the recipient.

Standard Tax Rate

• The standard withholding tax rate is 35%.

Applicable Income Types

The Verrechnungssteuer applies to:

• Dividends from Swiss companies
• Interest on bonds and Swiss bank accounts
• Certain insurance benefits (e.g., life insurance payouts)
• Some lottery winnings

Purpose of the Verrechnungssteuer

Ensuring Income Declaration

The primary goal of this tax is to ensure that income from capital is declared by taxpayers, as they must report it in their tax return to claim a refund.

Combating Tax Evasion

It serves as a control mechanism to deter and detect tax evasion, as non-declared income results in the loss of the withholding tax refund.

Refund Procedure

Swiss Tax Residents

• Eligible for a full refund of the withholding tax
• Must declare the income in their annual tax return
• Refund is typically processed via the cantonal tax authorities

Foreign Investors

• Refund eligibility depends on double taxation treaties (DTTs) between Switzerland and the investor’s country of residence
• Requires submission of specific forms to Swiss authorities

Importance for Investors

Understanding the Verrechnungssteuer is critical for:

• Investment planning: Knowing the net yield on Swiss investments
• Tax optimization: Ensuring refunds are claimed correctly
• Cross-border compliance: For foreign investors with Swiss income

Related Services

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