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5:00Tax Withholding on Dividends: The Cross-Border Refund Maze
A Swiss company pays you a dividend and 35% vanishes before it reaches your account. The treaty says you should only pay 15%. Getting the other 20% back can take two years, three intermediaries, and a paper certificate.
When a company in one country pays a dividend to an investor in another, the source country usually deducts withholding tax (WHT) at a high statutory rate *before* the cash leaves. The US default is 30%, Switzerland a punishing 35% (the *Verrechnungssteuer*), Germany 26.375% (25% plus a 5.5% solidarity surcharge). This is collected at source because the source tax authority cannot chase a foreign investor after the fact, so it takes its cut first and asks questions later.
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