New IRS-Switzerland Deal Cuts Withholding on Pension Dividends

If you hold a US retirement account or a Swiss pension plan that invests across the border, IRS Announcement 2025-8 is worth five minutes of your attention. Published in March 2025, it confirms a Competent Authority Arrangement (CAA) — a formal agreement between the US and Swiss tax authorities on how to interpret an existing treaty rule — signed in December 2024, clarifying that qualifying pension and retirement plans in both countries can be exempt from dividend withholding on cross-border stock holdings under Article 10(3) of the US-Switzerland tax treaty. In plain terms: if your IRA holds Swiss stocks, or your Pillar 3a holds US stocks, the dividends may no longer need to lose 15% or 30% to withholding at the source — but only if the exemption is actually claimed.

What IRS Announcement 2025-8 Actually Confirmed

The announcement itself doesn't create new law. It publishes the text of a Competent Authority Arrangement between the IRS and the Swiss Federal Tax Administration on how to apply an existing treaty provision. This particular CAA, dated December 5, 2024, supersedes an earlier arrangement from May 2021 and is explicitly retroactive: it applies to dividends paid on or after January 1, 2020. That retroactive window matters if your custodian withheld tax on a qualifying account any time in the past several years — there may be a refund still available.

Why This Matters if You Hold Retirement Accounts on Both Sides of the Border

Here's the situation that catches people off guard. Dividend withholding tax is charged by the country where the dividend originates — the 'source country' — before the money ever reaches the account holder. A US brokerage doesn't usually think about this because most domestic retirement accounts hold domestic stock. But plenty of Americans in Switzerland end up with cross-border exposure: a US IRA or 401(k) that holds international funds including Swiss equities, or a Swiss Pillar 3a portfolio that includes US stocks or US-listed funds. In both directions, the source country has historically withheld tax on those dividends before the pension account ever received them — even though pension accounts are exactly the kind of long-term, tax-deferred savings vehicle the treaty was designed to protect. For a broader look at how the IRS treats Swiss retirement vehicles generally, see our guide to Swiss pension plans and US taxes.

Qualifying US Retirement Plans

• IRAs — traditional, Roth, SIMPLE, and SEP
• 401(k) plans
• 403(b) plans
• 457(b) plans
• Profit-sharing plans
• Defined benefit pension plans
• Thrift Savings Plan (TSP) for federal employees and service members

Qualifying Swiss Pension Plans

• Pillar 2 occupational pension (BVG/LPP)
• Pillar 3a private pension — whether structured as a bank savings account or an insurance policy
• Vested benefits accounts (Freizügigkeitskonto) holding Pillar 2 assets between jobs

The Treaty Rule Behind It: Article 10(3)

The US-Switzerland tax treaty generally allows a source country to withhold a reduced rate on portfolio dividends paid to a resident of the other country — 15% under Article 10(2), instead of the 30% statutory rate the US applies by default to payments to foreign persons with no treaty claim on file at all. Article 10(3) goes further: it says the source country may not tax the dividend at all if the beneficial owner is a qualifying pension or retirement arrangement. The December 2024 CAA is essentially a shared, agreed-upon list of which US and Swiss plans count as 'qualifying' for that zero-withholding treatment. For more on how the broader treaty framework around dividend withholding has evolved, see our update on US-Switzerland tax treaty changes to dividend withholding and LOB rules.

Two Ways to Actually Claim the Exemption

This is the part that trips people up: the exemption is not automatic. Nobody at the IRS or the Swiss tax administration is scanning your account and quietly refunding money you didn't ask for. There are two mechanical paths, and which one applies depends on timing. Path one, the cleaner one, is exemption at source: before the dividend is paid, the account or its custodian provides Form W-8BEN — a form certifying the beneficial owner's foreign status and treaty claim — to the paying agent, along with documentation showing the account qualifies as a pension or retirement arrangement under the CAA. Done correctly, the dividend arrives with no withholding taken out at all.

Path two is the refund route, used when withholding already happened — which, given how new this guidance is, describes most accounts right now. That means filing Form 1120-F (the US tax form certain foreign-held accounts use to claim a refund) along with Form 8833, which discloses the specific treaty position being claimed, plus documentation proving the tax was withheld in the first place. Because the CAA applies retroactively to dividends paid since January 1, 2020, a multi-year refund claim isn't unusual.

The New Piece: Group Trusts and Institutional Investors

The December 2024 CAA didn't just restate the 2021 arrangement — it added something new: a procedure for US '81-100 Group Trusts' (pooled investment vehicles commonly used by US pension plans to invest collectively) to claim refunds of Swiss withholding tax. This is more relevant to plan administrators and institutional investors than to an individual account holder, but it signals the same underlying direction: both governments are actively working through the mechanics of getting withholding relief to the pension plans it's meant for, rather than just restating the rule and leaving implementation to chance.

What Doesn't Change: FATCA Reporting Still Applies

One thing this arrangement does not touch is your reporting obligations. Switzerland operates under a Model 2 FATCA (Foreign Account Tax Compliance Act — the law requiring foreign banks to report US-owned accounts to the IRS) agreement, meaning Swiss banks and custodians report US account holders directly to the IRS, and you separately need to report qualifying foreign accounts on your own US filings. A dividend being exempt from withholding tax has nothing to do with whether the account itself needs to be disclosed. If anything, getting the withholding question right is a good moment to double check the rest of your filing picture — our rundown of the 2026 tax filing season changes for Americans in Switzerland covers what else is different this year.

Practical Next Steps

1. Identify whether any of your retirement accounts — US or Swiss — hold stock issued in the other country.
2. Ask your custodian directly whether Form W-8BEN is on file and whether they're applying the pension exemption under the 2024 CAA.
3. If withholding already occurred on or after January 1, 2020, gather statements showing the amount withheld — this is your evidence for a refund claim.
4. Treat this as one piece of your overall cross-border filing picture, not a standalone fix.

None of this requires you to become a treaty specialist yourself. It does require someone to actually check the account-level mechanics — because right now, the gap between what the rule allows and what custodians are actually doing is where money gets left on the table. That's exactly the kind of cross-border detail worth working through carefully, one account at a time, ideally with someone who understands both systems.