How does Switzerland's 35% Verrechnungssteuer withholding work and how do I reclaim it?

The Verrechnungssteuer (VStG) is a federal security tax withheld at 35% on Swiss-source investment income: dividends from Swiss companies, interest on Swiss bonds, Swiss bank account interest above CHF 200 per year, and certain lottery prizes. The payer automatically deducts it before distributing funds, so you receive only 65% of the gross amount.

Swiss tax residents recover the full 35% by declaring the gross income on their annual tax return. The withheld amount is credited against the assessed income tax; if it exceeds the tax due, the surplus is refunded. The declaration requirement is intentional — it is an anti-evasion tool. If you fail to declare, you lose the refund entitlement permanently.

Foreign investors can claim a partial refund under applicable double tax treaties. The treaty-reduced rate for dividends is typically 15%, meaning only 20 percentage points (35% minus 15%) can be reclaimed via the treaty procedure. Applications are submitted to the FTA using form DA-1 (for portfolio holdings) or form R-82. Qualifying institutional investors may use simplified procedures. The reclaim process can take six to twelve months.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.