Situation
Shares · Dividends · Swiss withholding taxSwiss shares while living in Germany
If you are tax resident in Germany and hold Swiss shares as private investments, you need to coordinate, in particular, Swiss dividends, Swiss withholding tax, German investment income taxation and subsequent share sales. If the securities account is held with a Swiss bank, the foreign account data must also be prepared separately for your German tax return.
Overview
Swiss shares and German tax residence
If you are tax resident in Germany, investment income is generally subject to German taxation, even if the company, securities account and payment are all located in Switzerland.
At the same time, Switzerland levies withholding tax on Swiss dividends. The gross dividend, Swiss tax deduction, treaty relief and German tax credit must therefore be clearly distinguished.
A subsequent sale is generally subject to the German rules for private investments.
The reverse situation: German shares while living in Switzerland
TaxRep Switzerland examines the reverse situation from a Swiss perspective, covering German withholding tax, Swiss income and wealth taxes, and treaty relief.
Basic framework
Switzerland as the source country and Germany as the country of residence must be coordinated
Switzerland taxes dividends on the basis that the distributing company is Swiss.
Germany taxes the investor on the basis of German tax residence. The tax treaty provides relief from double taxation by limiting Swiss withholding tax and allowing a credit for the eligible amount.
- Establish the gross Swiss dividend
- Record the Swiss withholding tax
- Determine the withholding tax permitted under the treaty
- Reclaim the excess tax
- Report the dividend in Germany
- Claim a credit for the eligible Swiss tax
Dividends
German taxation generally starts with the gross dividend
When a Swiss company distributes a dividend, Swiss withholding tax is initially deducted.
For the German tax return, however, you should not simply report the net amount actually received. The starting point is generally the gross dividend.
Gross amount
Establish the full dividend before Swiss tax is deducted.
Tax deducted
Record the Swiss withholding tax actually deducted.
Tax treaty
Determine the Swiss withholding tax permitted under the treaty.
Germany
Take the dividend and the eligible tax credit into account in Germany.
Swiss withholding tax
The full Swiss withholding tax cannot simply be credited in Germany
Swiss withholding tax on dividends is higher than the amount Switzerland is generally permitted to retain under the tax treaty when the investor is resident in Germany.
The excess amount must therefore generally be reclaimed through the Swiss refund procedure.
A tax refund and a tax credit are separate steps
First, it is necessary to determine which portion of the Swiss tax can be reclaimed under the treaty. Generally, only the remaining tax permitted under the treaty is eligible for a German tax credit.
Share sales & capital gains
Ordinary Swiss portfolio share sales generally follow German investment income rules
Where a German-resident investor holds Swiss shares as private investments, the gain on disposal is generally calculated under German law.
Acquisition costs
The purchase price, incidental costs and subsequent corporate actions must be supported by clear records.
Sale proceeds
The sale price and disposal costs must be documented.
Foreign currency
Where statements are in CHF, the relevant amounts must be determined in euros for German tax purposes.
Loss relief
Losses on share sales are subject to the applicable German loss offset rules.
Swiss securities accounts
A Swiss bank generally does not handle German tax withholding
If the Swiss shares are held with a Swiss custodian bank, the bank generally does not withhold and remit German investment income tax for the German investor.
Investment income and disposal data must therefore be prepared for the German tax return using the Swiss bank documents.
Dividends
Extract the gross dividend and the Swiss tax deducted from the statements.
Share sales
Prepare acquisition costs and sale proceeds in accordance with German law.
CHF amounts
Convert foreign currency amounts appropriately for German tax purposes.
Annual documents
Swiss tax reporting does not automatically follow German tax rules.
The location of the securities account does not change German tax residence
An investor does not become taxable only in Switzerland simply because the securities account is held with a Swiss bank.
Distinguishing different shareholdings
A stock market investment differs from a substantial interest in a Swiss company
This page generally addresses Swiss shares held as private investments.
Where a person resident in Germany instead holds a substantial, business-related or controlling interest in a Swiss AG or GmbH, other German rules may become relevant to distributions, disposals, moving abroad and business shareholdings.
Larger Swiss shareholdings require a business and shareholding analysis
Particular points to assess separately include the ownership percentage, section 17 of the German Income Tax Act (EStG), the partial income method, management roles and, where relevant, exit taxation.
Common questions
Questions investors holding Swiss shares frequently need to clarify
Do I have to pay German tax on Swiss dividends?
If you are tax resident in Germany, Swiss dividends are generally subject to German taxation.
What happens to Swiss withholding tax?
The refundable portion and the withholding tax that Switzerland may retain under the treaty must be treated separately.
Should I report the gross or net dividend?
The starting point is generally the gross dividend before Swiss tax is deducted.
What if I use a Swiss securities account?
Income and sales generally need to be prepared separately for the German tax return.
How is a share sale taxed?
Ordinary portfolio shares are generally subject to the German investment income rules.
Can I claim a credit for all the withholding tax?
Generally not. An amount refundable under the treaty should generally first be reclaimed in Switzerland.
What about employee shares?
Employee shares may also raise payroll tax and cross-border remuneration issues.
What if I hold a larger interest in a Swiss AG?
The shareholding then requires a separate assessment from an ordinary stock market investment.
Checklist
Documents for Swiss shares held by German residents
Securities account documents
Annual account statement, holdings, custodian bank and transactions.
Dividends
Gross dividend, net amount credited and dividend statement.
Swiss withholding tax
Amount withheld, refund applications and refund decisions.
Acquisition costs
Purchase confirmations, cost basis and corporate actions.
Sales
Sale prices, numbers of shares, fees and sale dates.
Foreign currency
CHF statements and the conversion method used for German tax purposes.
Further reading
Four in-depth articles on Swiss shares held by German residents
These articles address four distinct practical issues: ongoing dividend taxation, Swiss tax refunds, share sales, and German tax reporting for a Swiss securities account.
Swiss dividends while living in Germany
Gross dividends, Swiss withholding tax, the tax treaty, German taxation and tax credits.
Read the articleReclaiming Swiss withholding tax from Germany
Refund entitlement, treaty relief, procedures, deadlines and supporting evidence.
Read the articleSelling Swiss shares while living in Germany
Disposal gains, acquisition costs, foreign currency, losses and the distinction from substantial shareholdings.
Read the articleA Swiss securities account while living in Germany
Foreign bank documents, German tax reporting, dividends, sales and CHF conversion.
Read the articleRelated topics
Further topics on Swiss investments and shareholdings
Investments & withholding taxes
Shares, interest, funds, securities accounts and Swiss withholding tax.
Explore the topicSwiss securities accounts for German residents
Foreign bank documents, dividends, sales and German tax returns.
Read the guideSwiss interest income for German residents
Bank accounts, fixed-term deposits, bonds and German taxation.
Read the guideSwiss AG or GmbH
Substantial shareholdings, business involvement, dividends, disposals and moving abroad.
Explore company shareholdingsGermany–Switzerland tax advice
Do you live in Germany and hold Swiss shares or a Swiss securities account?
We review Swiss dividends and withholding tax, treaty refunds, German taxation and tax credits, Swiss securities account documents, and the treatment of share sales.
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