A new European Union directive on withholding tax relief, agreed on 14 May 2024, requires member states to adopt rapid electronic procedures and near-real-time reporting by 1 January 2030, putting pressure on Switzerland to modernise its predominantly paper-based refund system that currently restricts claims to the calendar year following payment.
The European Union’s Faster and Safer Tax Relief of Excess Withholding Taxes (FASTER) directive establishes streamlined withholding tax relief procedures that expose significant gaps in Switzerland’s current system.
While EU member states prepare to implement rapid electronic refunds by 1 January 2030, Swiss authorities continue to rely on largely paper-based mechanisms, creating a competitive disadvantage for cross-border investors.
The current Swiss framework
Switzerland imposes a withholding tax of 35% on dividend payments from Swiss resident corporations and interest on bonds issued by Swiss resident debtors. This rate ranks among the world’s highest. Excess withholding tax cannot be recovered through mechanisms other than a formal refund process, and refund claims are restricted to the calendar year following payment, creating substantial delays for investors seeking cash recovery. For all jurisdictions except Germany, the process remains exclusively paper-based as of June 2026.
FASTER’s acceleration mechanisms
The FASTER directive, which EU member states must transpose into national law by 31 December 2028, introduces three interconnected innovations. Tax residency certificates will be issued electronically within 14 days, eliminating the postal delays that characterise the Swiss system. Member states must then adopt either relief-at-source treatment (where reduced rates apply at payment) or a quick refund procedure guaranteeing reimbursement within 60 days, with statutory interest payable if deadlines are missed.
Standardised XML-based reporting will occur in near-real-time, requiring financial intermediaries to file detailed payment information by the end of the second month following each transaction.
Implications for Switzerland
Swiss authorities recognise the need for digitisation and have expanded online filing, but only for German-resident investors to date. Extending digital access to other jurisdictions remains stalled pending bilateral agreements for secure transmission channels. The gap between the current Swiss practice—permitting refund claims only after each calendar year ends—and FASTER’s two-month window is substantial.
The EU standard may catalyse change at the cantonal level. Introducing electronic tax residency certificates modelled on FASTER’s standards would streamline relief processing for both foreign investors and Swiss banks managing refunds for Swiss resident clients participating in cross-border transactions.
Without such alignment, Switzerland risks reduced competitiveness as EU-based withholding regimes become faster and more accessible.
On 14 May 2024, the Council reached an agreement on the Faster and Safer Tax Relief of Excess Withholding Taxes (FASTER) Directive. The new rules make withholding tax procedures in the EU more efficient and secure for investors, financial intermediaries and national tax administrations.
