Tax glossary
Withholding tax (Verrechnungssteuer)
Swiss withholding tax is a 35 percent federal tax deducted at source from Swiss interest, dividends and lottery wins — if you declare the income correctly, you get it back in full.
Swiss withholding tax (Verrechnungssteuer) is a safeguard tax levied by the Confederation. You do not pay it yourself — the payer deducts it before the money reaches you. A Swiss company pays out only 65 percent of the dividend, a bank only 65 percent of the interest. The remaining 35 percent goes to the Swiss Federal Tax Administration (ESTV).
Its purpose is to make tax evasion unattractive. If you declare the income and the underlying assets in your tax return, you get the withholding tax back in full. For Zurich residents this happens through the tax return itself, either as a credit against your tax bill or as a payment. If you do not declare, the 35 percent is lost for good.
The refund claim is built into the securities and assets register (Wertschriften- und Guthabenverzeichnis). There is no separate form: listing the income in the column for income subject to withholding tax is enough. The claim expires if it is not made within three years after the end of the calendar year in which the income became due.
What withholding tax applies to
Withholding tax only applies to income from Swiss sources. Foreign dividends and interest are not affected — there, the source taxes of the country concerned apply.
- Dividends from Swiss shares and distributions from Swiss funds
- Interest on bonds issued by Swiss borrowers
- Interest on bank and savings accounts exceeding CHF 200 per calendar year
- Lottery and gambling winnings above CHF 1 million
- Certain insurance payouts, unless they are reported to the tax authorities
When you lose the refund
The law ties the refund to proper declaration. According to case law, if you forget income but correct this yourself before the assessment becomes final, you generally keep your claim. If the tax office discovers the income itself, however, the withholding tax is forfeited.
That is why completeness in the securities register matters so much. On forgotten income, you effectively pay twice: once as lost withholding tax and once as income tax on the amount added back.
- List every account and securities account — including children's savings and dormant accounts
- Declare gross income, not the 65 percent that was credited
- Check your bank's tax statement against your return
- Report forgotten income yourself before the tax office finds it
Withholding tax and non-residents
If you live abroad, you cannot reclaim withholding tax through a Zurich tax return. A refund is only possible under a double taxation agreement, via the Swiss Federal Tax Administration, and usually only in part. If you are planning to leave Switzerland, this is worth clarifying before you move.
Example: dividends from a securities account
A retiree in Winterthur holds shares in large Swiss companies. During the year he receives gross dividends of CHF 6,000. His bank credits only CHF 3,900; it withholds CHF 2,100 and passes it on to the Confederation.
In his tax return he declares the gross dividend of CHF 6,000 in the securities register. The CHF 6,000 is taxed as income, and the CHF 2,100 comes back with his tax statement — in the Canton of Zurich usually as a credit offset against his tax bill. Had he left the account off his return, the CHF 2,100 would be gone, with possible back-tax proceedings on top.
Frequently asked questions: Withholding tax (Verrechnungssteuer)
Why is no withholding tax deducted from my savings account?
Interest on bank deposits of up to CHF 200 per year is exempt. You still have to declare the account and the interest.
When do I get the withholding tax back?
With your tax assessment or final tax statement. In the Canton of Zurich, the credit is usually offset against your cantonal and municipal tax; any surplus is paid out.
Can I still report income I forgot?
Yes — and as quickly as possible. As long as the assessment is not yet final, a voluntary correction generally preserves your refund claim. For earlier years, a voluntary disclosure may make sense.
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