Guides

Reclaiming Swiss Withholding Tax for a Foundation

By Hansruedi Mueller, Swiss foundation lawyer · Published 21 July 2026 · Last updated 6 October 2026

Switzerland levies a withholding tax (Verrechnungssteuer) of 35 per cent on Swiss dividends and on interest from Swiss bonds and bank accounts. It is deducted at source, so a foundation that holds Swiss securities receives only 65 per cent of its Swiss investment income in cash. The good news is that a Swiss-resident foundation can usually reclaim the full 35 per cent, provided it does things correctly. The tax is a security deposit against proper declaration, not a final cost, but you only get it back if you claim it right.

The refund is not automatic. The foundation has to be entitled to the income, declare it properly, and file a claim within a time limit. Miss any of those and the 35 per cent stays with the Federal Tax Administration. This guide explains who can reclaim, how, and the traps that cost foundations, especially charitable ones, money they were entitled to recover.

For a foundation with a meaningful Swiss securities portfolio, this is real money. On CHF 100,000 of Swiss dividends, the withholding is CHF 35,000, recoverable only if the claim is made correctly and on time.

Key takeaways

• Switzerland withholds 35 per cent on Swiss dividends and interest at source.
• A Swiss-resident foundation can generally reclaim the full 35 per cent if entitled to the income.
• Legal entities, including foundations, claim using Form 25 to the Federal Tax Administration.
• The claim must be filed within three years of the end of the year in which the income fell due.
• A tax-exempt charitable foundation can also reclaim, and should, since the tax is otherwise a needless cost.

What the withholding tax is, and why it is refundable

The 35 per cent is a deposit, not a final tax, for those who declare properly. Switzerland deducts withholding tax at source on Swiss dividends, on interest from Swiss bonds and bank accounts, and on certain other income. The purpose is to encourage honest declaration: a Swiss recipient who properly reports the income can reclaim the tax, while someone who hides it forfeits it. So for a compliant foundation, the tax is refundable, but the refund is conditional on doing the reporting correctly.

Because the mechanism is about declaration, the entitlement to a refund depends on the foundation being the beneficial owner of the income and accounting for it properly. A foundation that holds Swiss shares as a genuine investment, records the income, and claims on time will recover the tax; one that is careless with any of those steps may not.

Who can reclaim: the conditions

A Swiss-resident foundation reclaims if it is the beneficial owner and declares the income. The core conditions are that the foundation is resident in Switzerland, that it had the right to use and enjoy the income when it fell due (it is the beneficial owner, not a mere conduit), and that it properly books and declares the income. Meet those and the foundation is entitled to a full refund of the 35 per cent on its Swiss investment income.

The beneficial-ownership condition matters for structures. A foundation interposed purely to strip withholding tax, without genuine entitlement to the income, will not qualify. For an ordinary Swiss foundation holding an investment portfolio to fund its purpose, the condition is straightforward: the income is genuinely the foundation’s, and the refund follows.

How a foundation claims: Form 25

Foundations claim as legal entities, using Form 25. A Swiss foundation reclaims withholding tax by filing Form 25 (the refund claim for legal entities) with the Federal Tax Administration, listing the Swiss income received and the tax withheld, and supporting it with the relevant vouchers and accounts. The Federal Tax Administration processes the claim and refunds the tax to the foundation. Many foundations file annually, aligning the claim with their accounts.

The practical work is in the documentation: dividend and interest statements, the foundation’s accounts showing the income booked, and evidence of residence and status. A foundation that keeps clean investment records finds the claim routine; one whose bookkeeping is loose spends far longer on it. This is one of the ongoing administrative tasks that comes with holding Swiss securities, alongside the audit and accounting duties a foundation carries.

The three-year deadline

The refund right expires, so timing is not optional. A claim for a withholding-tax refund must be filed within three years of the end of the calendar year in which the taxable income fell due. Miss that window and the entitlement lapses, the 35 per cent is simply lost, with no discretion to extend for a foundation that forgot to claim. This is the single most common way foundations lose money they were entitled to recover.

The remedy is a simple discipline: build the refund claim into the annual cycle, so each year’s Swiss income is reclaimed while it is fresh and well within the limit. A foundation that treats the claim as a routine annual step never bumps into the deadline; one that leaves it to accumulate risks losing the oldest years.

Charitable foundations: exempt from income tax, but still reclaim

A tax-exempt charity is exempt from income tax, not shut out of the refund, and it should claim. A common and costly misconception is that a foundation exempt from income tax has nothing to reclaim. The opposite is true: the withholding tax is levied regardless of the recipient’s income-tax status, so a charitable foundation suffers the 35 per cent on its Swiss dividends and interest just like any other holder, and can, and should, reclaim it. Failing to claim simply hands the charity’s money to the tax authority for no reason.

Tax-exempt institutions reclaim through the appropriate procedure for legal entities, and a foundation with confirmed charitable status generally recovers the tax in full. For a charity funding its work from an endowment, reclaiming withholding tax preserves the capital and income that would otherwise be needlessly eroded, which is exactly what stewardship of charitable assets requires. Our guide to charitable foundation tax exemption covers the status that underpins this.

Frequently asked questions

How much withholding tax does Switzerland levy? Switzerland levies withholding tax (Verrechnungssteuer) at 35 per cent on Swiss dividends and on interest from Swiss bonds and bank accounts, deducted at source. A foundation holding Swiss securities therefore receives only 65 per cent of that income in cash, and must reclaim the 35 per cent separately if it is entitled to a refund.

Can a Swiss foundation reclaim withholding tax? Yes, generally in full, if it is resident in Switzerland, is the beneficial owner of the income, and properly declares it. The foundation reclaims by filing Form 25 with the Federal Tax Administration. The tax is designed to be refundable to compliant Swiss recipients, so a foundation that reports correctly recovers it.

How does a foundation actually claim the refund? It files Form 25, the withholding-tax refund claim for legal entities, with the Federal Tax Administration, listing the Swiss income and tax withheld and supporting it with dividend and interest vouchers and its accounts. The Federal Tax Administration then refunds the tax. Many foundations file annually in line with their accounts.

What is the deadline to reclaim withholding tax? Three years from the end of the calendar year in which the income fell due. If the claim is not filed within that window, the refund entitlement lapses and the 35 per cent is lost. Building the claim into the annual cycle is the reliable way to avoid missing the deadline.

Can a tax-exempt charitable foundation reclaim withholding tax? Yes, and it should. Exemption from income tax does not remove the 35 per cent withholding levied at source, so a charitable foundation suffers it on Swiss dividends and interest and can reclaim it through the procedure for legal entities. Not claiming simply gives away the charity’s money, which good stewardship should avoid.

What records does a foundation need to reclaim? Dividend and interest statements showing the Swiss income and tax withheld, the foundation’s accounts showing that income booked, and evidence of its Swiss residence and status. Clean investment bookkeeping makes the claim routine; loose records make it slow. The documentation is essentially the same information the foundation needs for its own accounts.

Does reclaiming withholding tax depend on being the beneficial owner? Yes. The refund requires that the foundation had the right to use and enjoy the income when it fell due, that it is the beneficial owner rather than a conduit. An ordinary foundation holding investments to fund its purpose meets this easily; a structure interposed purely to reclaim tax without genuine entitlement to the income does not.

Is foreign withholding tax reclaimed the same way? No. Form 25 concerns Swiss withholding tax. Tax withheld abroad on foreign dividends is a separate matter, governed by the relevant double-tax treaty and the other country’s procedures. A foundation with foreign securities may have foreign reclaim rights too, but those are pursued under the source country’s own procedure.

This article is general information and not a substitute for formal legal or tax advice. Withholding-tax refund entitlement depends on the facts of each foundation. Please contact us for advice on your specific case.

Sources

• Swiss withholding tax of 35% on dividends and interest, Federal Act on Withholding Tax (Verrechnungssteuergesetz, VStG), Swiss Confederation (fedlex.admin.ch, SR 642.21).
• Refund of withholding tax to Swiss legal entities on Form 25, and the requirement of beneficial ownership and proper declaration, Federal Tax Administration (ESTV), withholding-tax refund guidance.
• Three-year time limit for refund claims, Art. 32 VStG (fedlex.admin.ch, SR 642.21).
• Refund available to tax-exempt institutions notwithstanding income-tax exemption, ESTV practice for exempt legal entities.