New requirement for refund of Swiss withholding taxes
What is new ?
The instructions regarding the application for refund of Swiss tax at source levied on lump-sum benefits from Swiss pension funds by Italian residents has recently been up-dated. According to this up-date, Italy has been added to the list of countries for which the foreign tax authority must certify the taxation of the benefit for the refund of Swiss tax at source.
The Federal tax administration has provided details concerning this certification process. Broadly there are two situations :
- The benefit is transferred to an Italian bank who levies a withholding tax of five percent of the lump sum benefit : The Italian resident requesting a refund must present a statement received from the bank of the gross amount of the lump sum benefit and the Italian withholding tax in Euros.
- The benefit is transferred to an Italian (or foreign) bank who does not levy a withholding tax on the lump-sum distribution : In this case, the Italian resident requesting a refund must present an Italian tax assessment whereby it is clearly indicated that the the lump-sum distribution benefit has been declared and taxed in Italy.
Proof of Italian tax residency at time of pension lump-sum payment continue to be mandatory for the reimbursement of Swiss tax at source or to benefit from the Double Tax Treaty in place between Switzerland and Italy.
Should you have any comments or questions arising from this blog, please contact us.