Hello all! This should be a simple one for some kind person who knows the answer, but I haven't been able to find a solution anywhere online.
If a dividend from a UK Ltd company is declared before I become Swiss resident, but the money is paid afterwards, is that income liable for Swiss tax (and does it need to be declared on a Swiss tax return)?
Here's a possible timeline:
30th November - Dividend declared
2nd December - Formally adopt Swiss residency
31st December - Balance of money transferred
In case it has any relevance, I'm transferring my residency from Italy, not the UK.
Swiss taxation of this money may or may not be to my advantage, but it would introduce accounting complexities that I'd rather avoid for now.
Assuming you will be completing a tax declaration for 2021, then all these dates fall in that year.
Dividends paid in Switzerland usually have 33% tax deducted. Dividends, gross or net, are entered on the tax declaration and adjusted accordingly - gross will attract appropriate marginal taxation. Net will allow some recoverable...
AbFab, thank you for a helpful and speedy response.
To clarify, then: If my main aim is to keep things simple and just have the income taxed in my current place of residence (Italy), the dividend would need to be both declared and paid before I take Swiss residence?
The reason I'm cautious about the money being Swiss-taxed is that I am both a director and the sole shareholder of the UK company, and I have been told informally that this implies special social security obligations in Switzerland - and that a salary-based route using ANobAG or a payroll company might be more efficient than dividends. I'm lost in the ins and outs of this and will need professional advice, and I can see that it will take some time to sort out. I'd like to know the best approach before I start exposing income to Swiss taxation!
On that note, if anybody reading has relevant advice and/or can recommend a reasonably priced accountant familiar with these issues, that would be very helpful.
That's what I was thinking. But if you've paid the tax in the UK, it's a credit against Swiss tax. UK dividends, IIRC, come with some kind of tax credit already?
Thanks NotAllThere. As a long-term UK non-resident, I don't pay any personal tax in the UK (though the company pays corporation tax there). My tax has been paid in Italy for the last few years.
Dividends are taxable at the time they become payable. This means either on the date of the General Meeting or by explicit resolution for a later date."
Mulhollander, thank you - you have found what I could not!
So by this measure, the date of declaration and the date payable, as per the dividend certificate, determine the taxability, not when the money is actually transferred - meaning that as long as this date is before my Swiss residency, it won't be taxable in Switzerland, even if the money is transferred subsequently. Am I correct?
(I'm reasonably certain that this is the direct meaning of what you quoted, but I'm putting it out there in these terms in case anybody would like to correct me or the source!)
Whether your Italian income from this year is taxable in Switzerland depends on a bilateral agreement between these countries. When I moved mid year to Switzerland both countries calculated their parts completely separately as that was the bilateral agreement (although my tax band in Switzerland was elevated as if I was getting the same salary x12 for that year).