The general meetings are over and the annual accounts have been approved. For many entrepreneurs, the next question is: how does the company’s profit reach my private account correctly? In Switzerland, the classic route is the dividend. It is, however, subject to clear rules, and a mistake with the withholding tax can be expensive.<\/p>\n\n\n\n
An AG or GmbH may only pay dividends out of retained earnings<\/strong> or free reserves<\/strong> created for this purpose. Before doing so, the company must allocate to its statutory reserves:<\/p>\n\n\n\n Anyone hoping to distribute the full profit in the first good year will quickly hit this limit.<\/p>\n\n\n\n The approved annual accounts are the basis. If the company has an auditor, the audit report must be available before profit appropriation is decided.<\/p>\n\n\n\n The board of directors or management proposes how much is distributed and how much is allocated to reserves.<\/p>\n\n\n\n The dividend is resolved by the general meeting (AG) or the partners’ meeting (GmbH). Important:<\/strong> record a due date in the minutes. Without an explicit date, the day of the meeting is deemed the due date, and the deadlines start running from that day.<\/p>\n\n\n\n Within 30 days of the due date<\/strong>, the company must declare the dividend to the Swiss Federal Tax Administration (FTA) and pay 35% withholding tax. An AG uses Form 103, a GmbH Form 110.<\/p>\n\n\n\n 65% of the gross dividend is paid out. Each shareholder receives a dividend statement showing the gross amount, the tax deducted and the net amount. This statement is needed for the refund.<\/p>\n\n\n\n Muster GmbH resolves a dividend of CHF 80,000<\/strong> to its sole partner.<\/p>\n\n\n\n The CHF 28,000 is not lost for the partner. Whether and how it can be recovered depends on where they live.<\/p>\n\n\n\n Resident in Switzerland:<\/strong> The dividend is declared in the tax return in the list of securities. The withholding tax is then credited against taxes due or refunded. Anyone who fails to declare the dividend loses the right to a refund.<\/p>\n\n\n\n A Swiss company as recipient:<\/strong> It files a refund claim directly with the FTA.<\/p>\n\n\n\n Resident in Germany:<\/strong> Under the double taxation agreement, Switzerland may only retain 15%. The remaining 20% can be reclaimed via the FTA’s online portal. The claim must be confirmed by the competent German tax office. In the example above, that would be CHF 16,000. More in our article on the Germany\u2013Switzerland double taxation agreement<\/a>.<\/p>\n\n\n\n If the recipient of the dividend is a company that holds at least 10%<\/strong> of the distributing company, the withholding tax often does not have to be paid at all. Instead, the distribution is merely notified:<\/p>\n\n\n\n\n
The process in five steps<\/h2>\n\n\n\n
1. Prepare and audit the annual accounts<\/h3>\n\n\n\n
2. Proposal for the appropriation of profit<\/h3>\n\n\n\n
3. Resolution of the general meeting<\/h3>\n\n\n\n
4. Settle the withholding tax<\/h3>\n\n\n\n
5. Pay out to the shareholders<\/h3>\n\n\n\n
Calculation example<\/h2>\n\n\n\n
Item<\/th> Amount<\/th><\/tr><\/thead> Gross dividend<\/td> CHF 80,000<\/td><\/tr> 35% withholding tax to the FTA<\/td> CHF 28,000<\/td><\/tr> Payment to the partner<\/td> CHF 52,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n How the withholding tax is recovered<\/h2>\n\n\n\n
Notification procedure: no tax payment for group holdings<\/h2>\n\n\n\n
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