Tax relief on dividends from a company you own

Finance, Taxes, Banking, Insurance and Retirement
1
Hello,

Does anyone know how the tax relief works for receiving dividends from a company you own?

I understand it exists but cannot find details on how it works. If you know of any specific rates that apply for different regions that would be great as well.

Thank you for any help.

2
You need to own at least 5-10% of the company to receive the dividend privelege, which is usually in the form of halved tax rate on the dividend. But this varies a lot by cantons and the devil is in the details.

Here's a nice overview from 2008, not sure how obsolete by now though

http://iframe.treuhaender.ch/GetAtta...94a08_0593.pdf

3
The company declares a dividend based on profit for 2016, in 2017. It fills in various forms, and pays the shareholders their share, minus a withholding tax of 35%. In 2018, on your personal tax return for 2017, you declare the dividend and the withholding tax. The withholding tax is then offset against the tax due for 2017.

Amount of actual tax due varies from canton to canton.

Done this for the past 3 years.

4
Thank you for your responses.

5
What you are referring to is the so called privileged taxation of dividend income ("privilegierte Dividendenbesteuerung").

If you own at least 10% of a company, the tax on dividends is reduced to 60% (for federal taxes).

At cantonal/communal level it varies between cantons. Some cantons allow for a reduction already at 5% ownership, with varying levels of reductions.

6
in the zuritax WV entry is this the " GmbH-Anteil " ?

TIA.

7
No, code Q for Qualifizierte Beteiligung.

8
Thanks

Just don't get the details on it. So for example you had a profit in 2016 and paid corporate tax on the profit of say 21%. Then in 2017 you give out dividend and this is taxed with 35%. In total now you are at 48% (35% of (100% - 21%).

Depending on the amounts that does not look like a good deal as it is similar or more than income tax.

So here this 60% or 50% reduction comes in. Where is this reduction applied?

9
When you file the tax return. You pay more taxes, reduction gets applied, then you get the original 35% back eventually

Consider that you're also saving 10.25% from not having to sponsor swiss retirees. You could also move your company to Meggen LU which AFAIK currently has the lowest corporate taxes, and shave maybe another 10% from your tax rate

10
35% is not strictly a 'tax', it is a with-holding amount, partly to ensure that everyone reports what they are supposed to report. the company must withhold it and transfer it to the tax office.

as ivank has said above, you get this back and, the full dividend (assuming you own more than 10% of the company), gets taxed 'properly' at only HALF ( ZRH ) of your normally calculated tax rate which is personal to you based on your reported world assets and income in the tax return. I think the cantonal median personal income tax rate (ZRH) is about 4--6%, i can't emphasise enough that this is calculated for each person/couple/tax return, but whatever it is for you, on your own dividend you will pay half as tax. So the company pays corporate ~21% on the profits and you pay personal 2--3% on the dividend.

if you got a dividend in AAPL, CS, UBS whatever, your broker with holds 35% and in the tax return you declare the total, the dividend total is added to your annual income and then you are taxed at the total rate.

11
ivank , you offer great advice as usual, but for clarity to others, this assumes that you the owner of the company are not drawing a salary or are operating as a 'sole trader' for tax reasons. in which case what you say is correct and that you have no state or corporate pension obligations to make and/but will not receive one when you retire.

12
Thanks!

Would one need income to get the tax back? so is it deducted or really given back. Income can for example be very low as per renovating the house. There would not be a lot of income left to deduct the 35% from.

13
On an additional note. I found some cantons only accepting that you have a minimal salary taken from your own SA/Sarl. I believe sums in the order of 120K.

I am in Vaud and havent found that detail yet