Swiss Taxes on USA Pension?

Finance, Taxes, Banking, Insurance and Retirement
1
Is my USA pension and IRA withdrawals taxed both in USA and Switzerland if I move to Switzerland? I am retired and all my income is derived from my USA pension, IRA withdrawals (RMD’s), and a retirement annuity. I’m sorry if this has already been addressed in the forum, but my searches have found info only on taxation of Swiss pensions in the USA.

2
1. Switzerland taxes pensions of its taxable residents whether they are domestic or foreign.

2. IRA withdrawals by a US Person resident and taxable in Switzerland will be taxed by the Swiss and the IRS. A foreign tax credit for taxes paid to Switzerland should be filed with the IRS for at least partial tax relief.

For more information:

https://www.credit-suisse.com/ch/en/...iz-201706.html

https://hodgen.com/ira-distribution-...ntry-taxes-it/

3
According to Article 18 of the tax treaty

https://www.irs.gov/pub/irs-trty/swiss.pdf

One is only taxable on pension income allocated from given state. So assume that your SS payments will only be taxable in the US.

4

The US-Swiss Tax Treaty has a so-called "Saving Clause" at Article 1, Para. 2.:

"ARTICLE 1

Personal Scope

2 Notwithstanding any provision of this Convention except paragraph 3 of this Article, the United States may tax a person who is treated as a resident under its taxation laws (except where such person is determined to be a resident of Switzerland under the provisions of paragraphs 3 or

4 of Article 4 (Resident)) and its citizens (including its former citizens) as if this Convention had not come into effect."

In plain English, a Saving Clause says that the U.S. has the right to tax its citizens abroad as it so decides but may relax this double taxation in selected areas.

Regarding US social security paid to US Persons in Switzerland, an excerpt from the below linked document notes:

"U.S. Social Security Benefits paid to Swiss residents

The United States, as the source country, subjects up to 85 percent of the benefits paid to U.S. citizens residing in Switzerland to taxation. Switzerland, as the residence country, also subjects the U.S. benefits received by those individuals to taxation. Foreign tax credit relief can be applied only on the U.S. side."

https://www.taxesforexpats.com/count...itzerland.html

5
Now confused. Time for an clever accountant with some imagination.

6
The above is semi-irrelevant because the US doesn’t see Social Security as a pension; neither is an IRA or 401K distribution a pension. These are savings plans with specific tax-sheltered status. What the status is, depends on the specific type of plan.

OP, the new treaty now recognizes IRAs as if they were Pillar 3 accounts and vice versa. The same is not true for Pillar 2 accounts and US Pensions. Any distributions will be taxable in Switzerland as income. Against this, you will be able to claim the foreign tax credit and possibly credits for any taxes paid on the post-tax contributions to your IRA (if structured as a Roth). However, you will need expert help with this and should contact an accountant as soon as possible to understand all the ramifications of your specific situation. This expertise could save you lots of money.