A Game-Changer for US Investors with Swiss Holdings
Imagine recovering thousands of dollars in overpaid Swiss taxes on your US retirement savings plan. Sounds too good to be true? It’s not anymore. A new agreement between the United States and Switzerland is making it easier than ever for US investors to reclaim Swiss withholding tax on dividends.
This breakthrough Memorandum of Understanding (MoU) brings long-awaited clarity and financial relief, ensuring that US retirement plans can fully benefit from tax treaty provisions. If you invest in Swiss companies through a retirement account, this could be a major win for you.
What’s Changing? The MoU Explained
In 2019, the US and Switzerland amended their Double Tax Agreement (DTA) to grant special tax privileges to institutional and individual retirement savings plans. However, questions lingered about eligibility, leaving investors uncertain. The newly signed MoU provides definitive answers.
Now, eligible US retirement accounts can claim a full refund of Swiss tax on dividends—a move that reduces investment costs and maximizes returns.
Additionally, in December 2024, Switzerland and the United States signed a new Competent Authority Arrangement (CAA), which further clarifies the eligibility of certain pension and retirement arrangements for treaty benefits.
Which US Retirement Plans Qualify?
The MoU clearly defines which US individual retirement savings plans are eligible for a full Swiss withholding tax refund under Article 10, Paragraph 3 of the DTA. The recognized plans include:
- Traditional IRAs (Code section 408(a))
- Individual retirement annuities (Code section 408(b))
- Roth IRAs (Code section 408A)
- SIMPLE retirement accounts (Code section 408(p))
- Simplified Employee Pension (SEP) plans (Code section 408(k))
This expansion benefits both employer-sponsored and personally managed retirement plans, making Swiss investments more tax-efficient.
Updated List of Eligible Pension and Retirement Arrangements
Beyond individual accounts, the MoU also updates the list of US pension and retirement arrangements that qualify for Swiss withholding tax refunds, including:
- 401(k) and 401(a) Qualified Pension Plans
- 457(b) Plans (for government and nonprofit employees)
- 403(a) and 403(b) Plans (for educators and nonprofit workers)
- Thrift Savings Fund (Section 7701(j))
- Group Trusts under IRS Revenue Ruling 81-100, serving eligible pension funds(must now include specific participant information in their reclaim applications).
Other US pension and retirement plans may still apply for eligibility, but approval will depend on Swiss tax authorities.
Critical Deadlines for Swiss Tax Reclaims
Timing is everything. The updated MoU provisions apply to dividends paid on or after January 1, 2020, but there’s a strict three-year deadline for reclaiming Swiss withholding tax:
- The deadline for 2020 and 2021 dividends has already passed.
- Reclaims for 2022 dividends must be submitted by the end of 2025.
The 2024 CAA clarifies that investors with previously rejected claims for dividends paid on or after January 1st , 2020, may have grounds to refile under the new procedures—provided the statute of limitations has not expired.
Missing these deadlines means losing out on your tax refund. Hence, investors should act fast to avoid forfeiting their claims.
Why This MoU Matters for US Investors
This agreement is a major win for US-based investors, bringing much-needed clarity and efficiency to the Swiss tax reclaim process.
- Higher Returns: By eliminating unnecessary tax burdens, investors can keep more of their earnings.
- Simplified Process: Defined eligibility criteria and clearer reclaim procedures reduce confusion and administrative hurdles.
- Stronger International Tax Cooperation: Aligns with global trends promoting fair treatment of cross-border investments.
How to Claim Your Swiss Withholding Tax Refund and Maximize Savings
While the MoU and 2024 CAA make eligibility clearer, the Swiss tax reclaim process remains slightly complex. Working with tax reclaim specialists can streamline the process, helping you avoid costly mistakes and maximize recoveries.
To fully benefit, ensure your tax reclaims are filed before deadlines expire. If navigating Swiss tax law seems overwhelming, consider partnering with Global Tax Recovery—our team of experts can guide you through the process and help you reclaim what’s rightfully yours.
Don’t leave your money on the table – contact us now to secure your Swiss withholding tax refunds!