Why double tax agreements exist

When a taxpayer earns income in a country other than their country of tax residence, they risk being taxed twice: in the country where the income is produced (source state) and in the country where they reside (residence state). This phenomenon — international double taxation — represents a significant obstacle to the mobility of people and capital.

To solve this problem, Switzerland has signed bilateral double tax agreements (DTAs, in German Doppelbesteuerungsabkommen – DBA) with over 100 countries. These agreements establish clear rules about which state has the right to tax certain categories of income and wealth, and to what extent.

Swiss DTAs largely follow the OECD Model Convention, but with specific adaptations negotiated bilaterally. For anyone living in Switzerland with foreign income — or residing abroad with Swiss-source income — understanding DTAs is essential to avoid excessive taxation and to exercise your rights.

What is a double tax agreement

A DTA is an international treaty between two states that governs the allocation of taxing rights on cross-border income and wealth. Here are the fundamental principles:

Elimination of double taxation

The primary purpose is to prevent the same income from being fully taxed in both states. The DTA provides specific mechanisms (exemption, tax credit or reduction of withholding rate) to achieve this goal.

Allocation of taxing rights

For each type of income (salary, dividends, interest, royalties, pensions, real estate gains, etc.), the DTA determines which state has the exclusive right to tax or whether the right is shared with maximum withholding rates.

Non-discrimination clause

Taxpayers of one contracting state cannot be treated less favorably than national taxpayers of the other state in comparable situations.

Exchange of information

Modern DTAs include clauses for the exchange of tax information between the administrations of both countries, in line with OECD standards (Art. 26 of the OECD Model).

Mutual agreement procedure

In case of disputes about the application of a DTA, taxpayers can initiate a mutual agreement procedure (MAP) between the competent authorities of both states.

How DTAs work: methods for eliminating double taxation

Swiss DTAs use mainly three methods to avoid double taxation:

Exemption method with progression reservation

The residence state exempts the foreign income from its tax base but considers it when calculating the rate applicable to remaining income. This is the most common method for employment income and real estate gains in Swiss DTAs.

Tax credit method (imputation)

The residence state taxes worldwide income but grants a credit for tax paid in the source state. The credit is limited to the domestic tax corresponding to the foreign income. Switzerland applies this method mainly for dividends, interest and royalties via Form DA-1.

Reduction of withholding rate

The DTA limits the maximum rate that the source state may apply (e.g. dividends: 15% instead of the Swiss 35%). The taxpayer can request a refund of the difference between the tax withheld and the treaty rate.

In practice, Switzerland applies the exemption method for employment and real estate income, and the lump-sum tax credit method (imputation forfaitaire – DA-1) for passive income (dividends, interest, royalties) from treaty countries.

DTA rates with key countries

Switzerland has DTAs with over 100 countries. Below are the maximum withholding rates for dividends, interest and royalties with the main trading partners:

Country	Dividends	Interest	Royalties
Italy	15%	12.5%	5%
Germany	15%	0%	0%
France	15%	0%	5%
Austria	15%	0%	0%
United Kingdom	15%	0%	0%
United States	15%	0%	0%
Spain	15%	0%	5%
Netherlands	15%	0%	0%
Portugal	15%	10%	5%
China	10%	10%	10%

The rates shown are the maximum permitted by the DTA. The effective rate may be lower if the domestic legislation of the source state provides a lower rate. Qualified holdings often benefit from reduced rates or full exemption.

The complete list of Swiss DTAs in force is available on the SIF (State Secretariat for International Finance) website. Switzerland periodically renegotiates existing treaties to align them with OECD/BEPS standards.

Swiss anticipatory tax refund

The Swiss anticipatory tax of 35% is withheld at source on dividends, interest and lottery winnings. DTAs allow beneficiaries resident in a treaty state to obtain a partial or full refund of the tax exceeding the treaty rate.

Form DA-1 (lump-sum tax credit)

For Swiss residents receiving foreign income from treaty countries, the recovery is through Form DA-1:

Attach Form DA-1 to your annual tax return
Report gross foreign income and withholding taxes paid in the source country
The tax office calculates the allowable lump-sum tax credit
The credit is deducted directly from federal, cantonal and municipal taxes owed

R Forms (refund for non-residents)

For non-residents receiving Swiss-source income subject to the 35% anticipatory tax, the refund is through R-series forms:

Complete the R form specific to your country of residence (e.g. R-IT for Italy, R-DE for Germany)
Have the form certified by the tax authority of your country of residence
Send the form to the FTA within 3 years of the due date of the taxable benefit

Watch the deadlines: the refund request must be submitted within 3 years of the due date. After this deadline, the right to a refund lapses. For Swiss residents, the request is made automatically with the tax return.

Foreign tax credit

If you reside in Switzerland and have paid taxes on income earned abroad, you can claim a tax credit to avoid double taxation. The mechanism depends on the type of income and the existence of a DTA.

Income with DTA and DA-1

For dividends, interest and royalties from treaty countries, the lump-sum tax credit is claimed via Form DA-1 attached to your tax return.

Income without DTA

If the source country has no DTA with Switzerland, double taxation is not automatically eliminated. In some cases, the foreign tax can be deducted as an expense in the Swiss return.

Employment income

For salaries earned abroad, the DTA generally grants exclusive taxing rights to the state where the work is performed. Switzerland exempts this income with progression reservation.

Real estate income

Income from property located abroad is taxed in the country where the property is situated. Switzerland exempts it with progression reservation, but considers it for rate determination.

Practical example: dividends from Italy

A Swiss resident receives CHF 10,000 in dividends from an Italian company. Italy withholds 26% at source (CHF 2,600). The DTA sets a maximum rate of 15%. The taxpayer can: (1) request a refund from Italy for the excess (11%, CHF 1,100); (2) claim a DA-1 tax credit in Switzerland for the remaining 15% (CHF 1,500). Result: the income is taxed only once.

Practical procedure: how to apply a DTA

Check if a DTA exists

Verify whether Switzerland has a DTA in force with the relevant country. The full list is available on the SIF or FTA website.

Identify the type of income

Each DTA has specific articles for each type of income (salaries Art. 15, dividends Art. 10, interest Art. 11, royalties Art. 12, pensions Art. 18, real estate gains Art. 13). Identify the applicable article.

Determine the state with taxing rights

Based on the applicable article, check which state has the right to tax and at what maximum rate. If both states have rights, verify the method for eliminating double taxation.

Request a reduction at source

If the source state withheld more tax than the treaty rate, file the appropriate refund form. For Switzerland as source state: R-series forms.

Complete the DA-1 in your Swiss return

Attach Form DA-1 to your tax return to claim the lump-sum tax credit for non-refundable foreign taxes. Keep all documentation.

Keep documentation for 10 years

Keep all documents relating to foreign income, withholding taxes and refunds obtained for at least 10 years.

Practical tips for international taxation

Always check for a DTA before investing abroad — the absence of a treaty can result in non-recoverable double taxation
For foreign dividends, always complete the DA-1: many taxpayers forget to claim the tax credit and end up overpaying
Claim the refund of foreign tax exceeding the DTA rate within 3 years — after the deadline, the right lapses
If you have income in multiple countries, keep a detailed record of withholding taxes to simplify your return and refund claims
Employment income earned physically abroad is generally exempt in Switzerland — make sure your employer applies the DTA correctly
For qualified holdings in foreign companies, check whether the DTA provides reduced dividend rates
In case of disputes, you can initiate the mutual agreement procedure (MAP) through the SIF — it's free and often effective
Use AccountEX to track foreign income and withholding taxes throughout the year, so you have everything ready for the DA-1 at tax time

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