You hold US stocks (Apple, Microsoft, Coca-Cola) and receive dividends. As a Swiss resident you are taxed on both sides of the Atlantic, but the double taxation can largely be neutralised if you take the right steps. Here is how it works, and what to do or avoid.
1. The US side: 30% or 15%
When a US company pays a dividend to a non-resident, the US levies a withholding tax. The default rate is 30%. Under the Switzerland-US tax treaty, a Swiss resident is entitled to a reduced 15% rate on portfolio dividends.
The key condition: having filed a W-8BEN form with your bank or broker. It certifies your Swiss tax residence and triggers the 15% rate. It is valid for three years. Without a valid W-8BEN, 30% is withheld and you lose half of it.
2. The Swiss side: it is taxable income
The US dividend is investment income. You must declare it at its gross value (before withholding); it is added to your other income and taxed at your ordinary rate.
A common misconception: the Swiss 35% anticipatory tax does not apply here. It only concerns Swiss-source dividends. On a US share there is no Swiss anticipatory tax, only the US withholding.
3. Recovering the 15%: the lump-sum tax credit (DA-1)
The treaty provides that the 15% withheld in the US is credited against your Swiss tax. This is done through the lump-sum tax credit, claimed via the DA-1 form attached to your return. Switzerland credits the 15% already paid abroad against the Swiss tax due on that income.
Two practical points: a minimum of CHF 100 per year of non-recoverable foreign withholding is required to obtain the credit; and Swiss banks provide a tax statement that pre-computes the DA-1 amounts. For US securities, an additional US tax retention sometimes applied is itself refunded in Switzerland via the return. In the end, with a correct W-8BEN and DA-1, you only bear the Swiss income tax.
What to DO
- File the W-8BEN with your bank to move from 30% to 15%, and renew it every three years.
- Declare the gross dividend and your securities in the statement of securities.
- Complete the DA-1 form to recover the 15% via the lump-sum credit.
- Keep the bank tax statement, which justifies and pre-fills your figures.
- Group your foreign securities to exceed the CHF 100 threshold.
What NOT to do
- Forget the W-8BEN. Result: 30% withheld, only 15% recoverable in Switzerland; the other half can only be reclaimed from the US IRS, a heavy and rarely worthwhile process.
- Fail to declare the dividend. That is tax evasion (back taxes, fines, interest), and you lose the credit.
- Assume the 35% anticipatory tax applies or will be refunded: it does not exist on foreign securities.
- Hold US ETFs without considering the fund's domicile. For many investors an Ireland-domiciled ETF (UCITS) is simpler: the fund receives US dividends at the reduced rate, and you have no W-8BEN or DA-1 to manage on those positions.
A worked example
Take a USD 1,000 dividend. With the W-8BEN, the US withholds only USD 150 (15%): you receive USD 850. In Switzerland you declare the USD 1,000; the tax due (say USD 300) is reduced by the USD 150 already paid thanks to the DA-1, so you only settle USD 150 here. You lose nothing.
Without the form, the US withholds USD 300 (30%), but Switzerland credits back at most the treaty 15% (USD 150): the extra USD 150 withheld is lost for good, and it repeats every year. The W-8BEN takes five minutes once every three years to leave nothing on the table.
In short
A US dividend is not double-taxed if you follow the mechanics: W-8BEN for 15%, declare the gross amount, and DA-1 to recover the 15%. The real trap is not the rate, but forgetting the form and not declaring.
At NeoFidu, we complete the statement of securities and the DA-1 form, check your foreign withholdings and optimise the structure of your investments.
General information, not personalised tax advice. Rates and practices change according to your situation.