I had VIAC and moved to Finpension exactly because of the lower withdrawal tax in Schwyz (for non residents). Another tip is to move Pillar 2 to two separate Finpension vested benefits accounts, which brings additional tax savings with staggered withdrawals.
For non residents it’s highly recommended to check the double taxation agreement between Switzerland and the country of residence. For the UK you can withdraw 100% of Pillar 2 since it’s no longer an EU country. In the old englishforum there were a couple of good thread discussing the UK tax on Swiss pension withdrawal.
Application of ESC A10 after 5 April 2011
It was announced on 31 March 2011 that ESC A10 would largely be withdrawn as new legislation at Part 7A ITEPA 2003 would provide a ‘just and reasonable’ reduction in the amount of employment income chargeable to income tax for duties performed outside the UK. This new ‘just and reasonable’ reduction would operate for ‘overseas service’, however ESC A10 was to continue to apply to:
• payments of lump sum relevant benefits received directly from the employer; and
• payments of lump sum relevant benefits out of rights which had accrued before 6 April 2011. To put this on a statutory footing, an Order was made on 4 February 2014 under section 160 Finance Act 2008. Article 5 of The Enactment of Extra-Statutory Concessions Order 2014 (SI 2014/211) inserted section 395B into ITEPA 2003 and this, together with the working of Part 7A ITEPA 2003, achieves the above limited continuation of the effect of ESC A10 where relevant benefits are provided in respect of ‘foreign service’.
ESC A10 does not, therefore, apply to lump sum payments made on or after 5 February 2014. Foreign service relief on such payments is given by section 395B ITEPA 2003 - see EIM15325 for details. There are worked examples showing the operation of relief under both ESC A10 and section 395B at EIM15326. Note: For lump sum payments made from a non-UK based arrangement on or after 6 April 2017 this treatment will only apply where the recipient of the payment is non-UK resident throughout the tax year of receipt. If the recipient is UK resident, the payment may be a “relevant lump sum” taxable as pension income under Part 9 ITEPA 2003 rather than under the EFRBS provisions – see EIM74510 for more details
Just an update. I rang the UK tax office directly and spoke with a very knowledgeable technical specialist. He confirmed that for me, article 18 (or 19) of the treaty means that the pillar 2 lump sum is still NOT taxable in the UK. This info needs to be put into the ‘other information’ box on the self assessment form. So you do need to mention it and what you are applying the DTA to. I did not need to apply anything like the successor of the ESC A10 provision (grandfathering rules). Although they would have worked for funds built up until 2011 as well. But the treaty itself is enough. Disclaimer: I am not a tax advisor. If you need to check your situation, I recommend ringing them and/or taking professional advice.