Bonds for Swiss Investors: Yields, Risks and Tax
How bond prices and yields move, what Swiss Confederation bonds offer and how interest is taxed.
5 min read · Savings & Investing
A bond is a loan: you lend money for a set time and get regular interest, called the coupon, plus the face value back at maturity.
Price and yield
When market interest rates rise, existing bond prices fall, and when rates fall, prices rise. The yield to maturity tells you the total annual return if you hold to maturity, including the gain or loss versus face value.
Example with default values. Open the calculator →
Types
- Confederation bonds: issued by the Swiss federal government, with very low default risk.
- Cantonal and municipal bonds: slightly higher yields with low risk.
- Corporate bonds: higher yields, more risk.
Risks
- Interest rate risk: longer maturities react more.
- Credit risk: the borrower may fail to pay.
- Inflation risk: real returns can be low or negative when yields are near zero.
Taxes
Interest is taxable income and Swiss issuers' interest is subject to 35 % withholding tax, reclaimable if declared. Price gains on private holdings are generally tax-free, though bonds with a predominantly one-time interest payment are taxed differently.
Calculate yields with the bond yield calculator.