Tax on dividends from foreign companies

Finance, Taxes, Banking, Insurance and Retirement
1
This has probably been answered here before but really struggling to find the specific answer.

How are Swiss residents (B-EU) taxed on dividends (profits) collected from non-Swiss businesses in which they are major shareholders.

I'm finding some conflicting information, with some suggesting they're taxed at income tax levels and others suggesting foreign soured income is not taxed at all.

Any general guidance appreciated!

2
You can always call the cantonal tax office and ask. They are usually helpful.

If you have salary income to my knowledge you'll pay tax as the dividends were your salary income. At least that is how we pay.

3
To my knowledge, foreign sourced income from investments is taxed similarly to any other income. For dividends, there is some added complexity due to the different tax treaties between countries, i.e., where the income is taxed. For some countries, there may be some tax paid where the income is earned and additional tax in CH - depending on the treaty.

In some cases, companies distribute their proceeds in the form of capital gain rather than dividend (or a combination of both). In CH, the capital gain part is not taxable for non-professional investors while the dividend part is taxable as regular income. In other countries, capital gain is often subject to tax.

4
Got it - thanks for this.

So to check I understand correctly... your understanding would be that in a case study where dividends are paid from a country which does not withhold dividend tax (but levies corporation tax), then normal income tax would be applied in Switzerland?

That would seem to be most logical.

5
in almost all cases you just declare them as income and are taxed accordingly

6
One remark: Be careful on the wording of the treaty, i.e., where dividends should be taxed and how tax residency should be declared and documented.

For example, if the first country levies tax on dividends for local tax residents but not for CH tax residents and the person does not correctly declare and document tax residency, the first country will withhold tax yet CH will not consider that withholding and will tax the full dividend amount.

On the other hand, if the tax treaty specifies that certain withholding is in the first country and only the tax difference between that withholding and CH income is payable in CH ...

7
This was my best guess, and makes sense. Thank you.

8
Got it, thank you. My understanding is that the first country in this case does not withhold taxes to non-residents. So that should simplify the situation in that all corporation tax would be due in the first country and all dividend/income tax would be payable in Switzerland I believe, with no opportunity for double taxation.