What is Dividends?

Home » Glossaries » Dividends

Dividends are portions of a company’s profits distributed to its shareholders as a reward for their investment. In Switzerland, dividends are a common way for companies to share financial success with their stakeholders, governed by the Swiss Code of Obligations (CO) and relevant tax regulations.

Dividends in Swiss Corporate Law

Swiss companies, such as sociétés anonymes (SA) or limited liability companies (GmbH), may issue dividends to shareholders, provided they meet specific legal and financial criteria. Dividends are typically declared during the annual general meeting after the company’s financial statements are approved.

Key conditions for dividend distribution include:

  • Sufficient retained earnings or profits from the current financial year.
  • Compliance with legal reserve requirements, which mandate retaining a portion of profits for financial stability.

The decision to pay dividends must also consider the company’s liquidity and future investment needs.

Tax Implications of Dividends in Switzerland

Dividends are subject to withholding tax at a standard rate of 35%, deducted at the source. However, shareholders can often reclaim part or all of this tax under certain conditions, such as tax treaties or if they reside in Switzerland.

Dividends represent a vital link between a company and its shareholders, offering a tangible return on investment while reflecting the company’s financial health and commitment to its stakeholders. In Switzerland, they play an integral role in the country’s business ecosystem and investment strategies.