In addition to VAT, there are other federal taxes in Switzerland that should not go unmentioned here, because we want to give you as broad an overview as possible of the Swiss tax system.
Stamp duty is a turnover tax payable on the purchase and sale of shares, bonds, funds and other securities. It is also called transaction tax and is withheld by the bank or broker and paid to the state. It is based on the turnover of the security. A distinction is made between domestic and foreign securities:
- 0.15% for domestic ISIN
- 0.3% with foreign ISIN
Withholding tax is due on income from investments (e.g. dividend payments or returns with a total value of more than CHF 200 per year). This amounts to 35% and is withheld by the Swiss broker (bank or investment partner) and paid to the state.
The withholding tax is refunded in full if the tax return includes all income from investment income completely and correctly. If the investment income is not declared, incompletely declared or incorrectly declared, the withholding tax will be withheld. It serves to prevent tax evasion.
Withholding tax is paid both by taxpayers in Switzerland and by foreign investors. The latter are only or partially refunded the withholding tax if this is regulated within a double tax treaty with the investor’s country of residence.
EU Savings Directive
Within the countries of the EU, the EU Savings Directive applies, which provides for automatic exchange of information (AEOI) on financial accounts between individual member states. This directive facilitates exchanges between banks for tracking interest payments to individuals living in another EU state.
A similar agreement exists between Switzerland and the EU. This states that interest payments from Switzerland to an individual in the EU are taxed at the EU withholding tax rate of 35%.
All interest payments subject to Swiss withholding tax are exempt from EU withholding tax. This means that a person living in the EU who receives interest payments from a Swiss bank does not have to pay EU withholding tax if the bank is instructed to declare the payment to the Swiss tax authorities and withholds the withholding tax.
Want to know more about living and working in Switzerland and its financial implications? Contact us with a non-binding request.