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Switzerland: Domestic Corporate Taxation

Withholding Tax

The Swiss federation has the exclusive right to levy withholding tax. The general rule is that withholding tax is deducted at source from distributions made by Swiss entities. The rate is 15% on pension fund benefits, 8% on insurance benefits and 35% for "investment income", which includes corporate dividends and interest from bank accounts, bonds & debt instruments.

From July 2005, the EU's Savings Tax Directive was implemented in Switzerland, and a withholding tax of 15% was being applied to the returns on savings of citizens of EU member states. The rate rose to 20% on 1 July 2008 and to 35% on 1 July 2011.

No withholding tax is levied on royalties paid to foreign beneficiaries. Profits repatriated abroad by the Swiss branch of a foreign company do not attract withholding taxes irrespective of any double taxation treaty.

NB: Switzerland has double taxation treaties with over 80 other countries, and these determine the rates of withholding tax in most cases, rather than the general rules above.

 

 

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