Under certain conditions, the anticipatory tax levied in Switzerland on certain income can be reclaimed – even if you have your tax residence abroad. In this article, we explain everything you need to know about anticipatory tax and how to reclaim it.
What is Swiss anticipatory tax?
Anticipatory tax is levied in Switzerland by the federal government on movable capital assets (e.g. interest and dividends), as well as life annuities, pensions, lottery winnings and certain insurance benefits. The tax is withheld by the payer and the taxpayer receives a certificate from the payer documenting the tax withheld. This makes anticipatory tax comparable to withholding tax.
The anticipatory tax rate varies depending on the type of income:
- 35% on investment income (interest and dividends) and lottery winnings
- 15% on life annuities and pensions
- 8% on other insurance benefits
Is anticipatory tax recoverable?
Anyone who lives in Switzerland and is liable to pay tax there will receive a full refund of the anticipatory tax if they declare all their income and assets in their tax return. The refund must be applied for within three years of the due date of the taxable benefit.
The situation is different for recipients resident abroad: in this case, the anticipatory tax represents a final charge and can only be refunded if a double taxation agreement exists between Switzerland and the country of residence. The agreement regulates which income is taxable in which state.
Functioning of double taxation agreements
« In this way, it is avoided that someone who is resident abroad but has income in Switzerland (e.g. through capital gains) is taxed by both the country of residence and Switzerland. »
A double taxation agreement between two states is intended to prevent both states from taxing the income and/or assets of a taxpayer. The form of a double taxation agreement varies and is negotiated between the two contracting states. It is then determined which state receives the right of taxation for which type of income or assets.
In this way, it is avoided that someone who is resident abroad but has income in Switzerland (e.g. through capital gains) is taxed by both the country of residence and Switzerland.
Switzerland has double taxation agreements with over 100 countries, including Luxembourg, Sweden and the United Kingdom.
How to claim your refund
If you are tax resident in Luxembourg, Sweden or the United Kingdom, you can make use of the double taxation agreement with Switzerland to reclaim anticipatory tax from your Swiss income.
What can be reclaimed?
The anticipatory tax withheld on investment, income, pensions, or certain insurance benefits can be reclaimed. Anticipatory tax on lottery winnings cannot be reclaimed.
Whether you get a partial or full refund of anticipatory tax is governed by the relevant double taxation agreement that Switzerland has concluded with your country of residence.
Using dividends as an example, we would like to illustrate what proportion of the anticipatory tax withheld you would get back if you were resident for tax purposes in Luxembourg, the United Kingdom or Sweden:
- Tax residence Luxembourg: Switzerland withholds 15% (refund: 20%)
- Tax residence United Kingdom: Switzerland retains 15% (refund: 20%)
- Tax residence Sweden: Switzerland keeps 15% (refund: 20%)
In all cases, it is therefore worthwhile to apply for a refund of anticipatory tax.
Procedure for the application
Just like persons who are domiciled in Switzerland for tax purposes, persons domiciled abroad also have three years to apply for a refund of anticipatory tax.
Specifically, you are entitled to a refund if you file the claim within three years of the end of the calendar year in which the tax became due.
So you are free to collect your dividends or interest payment for three years first and only then apply. This way you do not have to apply every year.
The application for refund of Swiss anticipatory tax for beneficiaries residing abroad is different for each country with which Switzerland has a double taxation agreement. The form for each country has an individual number:
- Luxembourg: Form 79
- Sweden: Form 80
- United Kingdom: Form 86
You can find the forms on the website of the Federal Tax Administration.
You usually need to attach the following documents to the application:
- A confirmation from the tax authority abroad that you are entitled to make use of the regulations in the double taxation agreement
- A confirmation from your broker stating that 35% of the Swiss anticipatory tax has been withheld
How long does it take to get a refund?
Since the Swiss tax authorities have to review more than 300,000 applications per year, you need to be patient. Several months may pass between submitting the refund request and the actual refund.
Make sure that the information in your applications is not incomplete and that you can support it with evidence. This prevents questions and helps to ensure that the process does not drag on unnecessarily.
Do you have further questions about taxation in Switzerland? Contact us for a non-binding quote. We will contact you promptly and discuss your individual situation.