Taking 2nd and 3rd pillars when leaving CH

Finance, Taxes, Banking, Insurance and Retirement
1

Hello.
I believe that this question was asked in different forms, but will be good to get a fresh view.

I’m 55 and exploring to leave CH and liquidate my assets, and plan.to eetire in a none EU county.

  1. Can I take my 2nd and 3rd pillar when leaving (cash them out)?
  2. Will i have to pay tax when doing that?
  3. Anything special to consider?

Thank you.
Ariel

2
  1. Yes, provided you’re not a Swiss or EU citizen.
  2. I’m afraid yes.
  3. There was a not so old thread about taxes when cashing out 2nd and 3rd pillars. The declared place of residence matters. I’ll look for that thread later, otherwise:
    Pillar 3a withdrawal tax: a comparison of cantonal taxes – finpension

Also, beware of additional taxes in non-EU country.

3

1 Yes, you can, also as a EU person (ask Fatmanfilms), I recently cashed in some Pillar 3 funds
2 Yes

As to Axa´s point, check what is more beneficial form a tax point of view, in some countries Pillar 2 is not taxed when withdrawn.

4
  1. Yes you can take 2nd and 3rd if moving to non-EU country (citizenship doesn’t matter), you can withdraw as well 1st pillar if you are non-EU citizen only (~8.7% of all your earnings in switzerland)
  2. Taxes are applied on withdrawal when you leave (your swiss residence doesn’t matter), the percentage applied depends on pension fund (they usually have tables with percentages, for example UBS ~4% on 3rd pillar)
  3. To start withdrawal you need official paper from gemeinde that you are leaving, requests can be submitted as i recall up to 3 months before date of leave
5

Thank you :folded_hands:
With regards to 2nd pillar taxation - my understanding is that this tax is determined by the new (none EU) country. Is that correct?
So, for example, I will pay zero tax if this country has zero tax for new residents.

6

No you will pay swiss tax as well, they will deduct automatically when transfering money (so percentages vary depending on fund from 1%-7% or smth like this, you just need to find or ask your pension fund how much is it), then depending on your non-EU country you have to pay taxes (or not) on your money there as well, if countries have double-taxation agreement with switzerland, then after paying taxes in non-eu country you can ask for reimbursement from switzerland (but i don’t think there will be full reimbursement, probably some percentage also)

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7

There are 2 taxes to consider:

  1. Swiss taxes
  2. Foreign taxes

Foreign taxes depend on the country. Some do not tax this at all.

For Swiss taxes, you will have withholding taxes based on where the PF is located. This is why some transfer their pension into a vested benefits account located in favourable jurisdictions such as Schwyz to minimize such taxes.

Another thing to consider is whether you can withdraw all or part while still tax resident in Switzerland and whether that would be favourable (both to tax in Switzerland and/or to split up the withdrawal into different tax years and potentially different taxing jurisdictions). In this case you pay the Swiss taxes where you are resident. This varies substantially depending on canton.

e.g. you quit your job, withdraw some pension to pay off house or start self-employment. this withdrawal is taxed under canton rules and may be taxed lower if only a portion of the PF is taken (many cantons have progressive taxation on withdrawal). you shift the rest into a VB account in SZ (low withholding taxes). next tax year you leave switzerland and move to, say, Singapore withdraw the rest in Singapore paying withholding tax in SZ and receiving tax free in Singapore.

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8

for the sake of listing options, IIRC when you leave to EU country you can still withdraw over-mandatory portion from 2nd pillar, the mandatory portion will have to wait in Switzerland till retirement age

another point, if you’ve made any voluntary payments into 2nd pillar that are still not eligible for financing home-ownership (it’s 3 years from the transfer date) you won’t be able to withdraw from 2nd pillar until that expires (I’m curious if it’s possible to withdraw all but the non-eligible amount)

9

If you move to the UK there are no UK taxes.

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