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Investing and taxes
Learn what investment income is taxable and how you can reclaim withholding tax, as well as other useful information for investors.
Capital gains are profits from the sale of shares, funds or bonds if they are sold at a higher price than the purchase price. If you sell securities at a profit as a private individual, these price gains are generally tax-free, provided these securities are held as private and not business assets.
Additionally, the Federal Tax Administration FTA defined criteria to examine whether a person might be classified as a professional securities trader:
If only some of these criteria are met, it cannot be assumed that the assets are managed privately. However, the final assessment lies with the tax authorities, whereby it should be noted that they are extremely unlikely to classify an individual as a securities dealer. The consequences of this classification would include:
Withholding tax is a tax levied at source by the federal government. It amounts to 35 percent of income from movable capital assets, such as interest or dividends. It applies to Swiss sources such as securities, bank accounts, etc.
This means you only receive 65 percent of the interest and dividends from your bank – the remaining 35 percent is paid directly to the Federal Tax Administration FTA. Withholding tax is primarily used to combat tax evasion, as payment of the tax means all investment income is disclosed to the tax authorities.
To avoid disadvantaging investors with this approach, as a taxpayer resident in Switzerland you can reclaim the withholding tax through their tax return. To do so, you must list any interest as income and the corresponding credit balance as assets in the list of securities on your tax return. Once this has been fully completed, you will receive the 35 percent withholding tax back from your cantonal tax authority. It will then be offset against your cantonal and municipal taxes or refunded. For taxpayers living abroad, the refund depends on whether a double taxation agreement exists.
The state also deducts the withholding tax directly from winnings from lotteries and skill-based games used for sales promotion, unless they are classified as tax-exempt by the Federal Act on Direct Federal Taxation. Pensions and benefits from insurance policies (life insurance, pillar 3) are also subject to withholding tax. This tax rate is lower (15 or 8 percent) and depends on the type of product.
UBS provides you with all the important documents you need for your tax return in Mobile Banking and E-Banking.
Select “Bank documents” in your profile; you will find all the main documents in the “Tax reporting” folder. These documents are often sufficient as proof, and you can avoid filling out the securities list in the tax return separately
We will be happy to tell you more about the various investment and savings options and find the right solution for you.
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In addition to non-taxable price gains, interest income from pillar 3a and your vested benefits accounts – provided this is for your retirement – also remain untaxed.
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