What Taxes Are Paid on Deposit Accounts in Switzerland?

Deposit accounts (or high-yield savings accounts and fixed deposits) are a fundamental pillar of the savings strategy in Switzerland. They offer security and, thanks to the recent rise in interest rates, increasingly attractive returns. However, like any financial instrument, deposit accounts are subject to specific tax regulations that are essential to know for proper financial planning.

Understanding the taxation mechanism is crucial to maximize your gains and ensure you comply with all declaration obligations. If you are looking for the best options, you can start by consulting our deposit account comparison.

Taxation of Interest: The Withholding Tax (35%)

The main tax applied to the proceeds generated by deposit accounts in Switzerland is the Withholding Tax (Verrechnungssteuer), regulated by the Federal Act on Withholding Tax (WHTA).

How the Withholding Tax Works:

The Withholding Tax is a tax deducted at the source by the debtor of the taxable benefit (in this case, the bank) and paid to the Confederation.

• Rate: The standard rate is 35% on interest ( or dividends).

• Deduction Mechanism: When your bank credits the interest to your deposit account, it immediately deducts 35% and transfers it to the Federal Tax Administration (FTA). Only 65% of the accrued interest is credited to you.

• Purpose: The main purpose of the Withholding Tax is to serve as a guarantee instrument against tax evasion.

The Refund: The Crucial Condition

The 35% deduction is not a definitive cost, but a refundable tax advance. To recover the 35% withheld, you must meet a fundamental condition:

You must correctly and completely declare, in your annual tax return (section "Securities and Deposits"), both the capital (the account balance as of December 31) and the gross interest accrued during the fiscal year.

Once the cantonal tax authority has verified the accuracy of your declaration, the amount of the Withholding Tax (35%) is deducted from your total cantonal and municipal taxes or, if higher, refunded to you. If you do not declare the interest, you will lose the right to the refund.

Taxation on Capital: Wealth Tax

In addition to interest, a tax on the capital itself is also applied in Switzerland.

• Wealth Tax: The balance of your deposit account as of December 31st of each year is considered part of your net worth and is subject to the Wealth Tax, collected at the cantonal and municipal level. The rate varies significantly from Canton to Canton and is based on a progressive system.

Tax Comparison with Other Instruments

The taxation of the deposit account is clear: interest is taxed as income once a year (after the Withholding Tax refund), and the capital is subject to the Wealth Tax.

Let's see how this taxation differs from other popular investments in Switzerland.

Tax Feature	Deposit Accounts (Savings)	Pillar 3a Retirement Account	Online Trading Gains
Interest/Proceeds (Accumulation Phase)	Subject to Withholding Tax (35% refundable) + Income Tax after refund.	Tax Exemption: Interest, dividends, and capital gains generated within Pillar 3a are tax-exempt.	Tax Exemption: Capital gains from private online trading are tax-exempt (for the non-professional investor). Dividends and interest are taxed as income.
Capital (Wealth)	Taxed annually with the Wealth Tax (varies by Canton).	Tax Exemption: Capital accumulated in Pillar 3a is exempt from Wealth Tax.	Taxed annually with the Wealth Tax (portfolio value as of December 31).
Contributions	Not deductible from taxable income.	Tax Deduction: Annual contributions are fully deductible from taxable income, leading to an immediate and significant tax saving.	Not deductible from taxable income.
Withdrawal	Free.	Taxed separately from other income at a reduced and progressive tax rate, only at the time of withdrawal (usually at retirement).	Free.

Pillar 3a Focus

The Pillar 3a Retirement Account benefits from an exceptionally favorable tax regime, designed to encourage individual retirement planning. This makes it the primary choice for those aiming for a long-term savings strategy.

Online Trading Focus

In Switzerland, the private (non-professional) investor benefits from tax exemption on capital gains resulting from the sale of securities, stocks, or cryptocurrencies. Caution: If your trading activity is classified by the FTA as "self-employed activity" (professional trader), all gains will be subject to income tax, AHV/IV contributions, and you will lose the capital gain exemption.

In Summary: Your Choice

Deposit accounts offer security and liquidity, but their taxation is less advantageous than Pillar 3a. Trading, while offering the advantage of private capital gain exemption, exposes you to market risk.

The best choice is almost always a balanced combination of these instruments:

1. Use Pillar 3a for long-term savings, taking advantage of the maximum allowed tax benefits.

2. Use Deposit Accounts for emergency liquidity or short/medium-term goals, accepting the normal taxation on interest and wealth.

To find the deposit account option that offers the best return net of Withholding Tax, start the comparison today.

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