Taxes on Swiss 2nd pillar

Finance, Taxes, Banking, Insurance and Retirement
1
Hi,

I have been living in the UK for many years and would like to entirely withdraw my Swiss 2nd pillar as it is possible to do since Brexit.

I am still struggling to find accurate information about taxes in the UK though. Does anyone know if the 55% taxes on 2nd pillar of more than £30,000 is correct ?

Many thanks for your help.

Mina

2
UK is of course fvcked up in many ways and your intuition is generally correct, but this is not of them

Lump sum withdrawals are explicitly not taxable on UK side per UK/CH tax treaty. You're only going to pay relatively small swiss withholding tax to the canton where your pension institution is based. If we're talking 6+ figures it can be worth to transfer the money to an institution in SZ and withdraw from there - withholding tax there is lowest like 4-5%. Very well known loophole. On the other hand all SZ funds know this and going to charge fees upwards of ~500 CHF to process a withdrawal, whereas in other cantons it's normally free

3
Thanks, this is really helpful as I was told by the Swiss pension fund that I would have to pay crazy taxes back in the UK.

4
Does anyone knows a reliable source for the taxes rates, in Zurich and Schwiz in particular, for these 2nd pillars withdraws? I keep finding contradictory information

5
The cantonal tax authorities e.g. for Zurich: tax calculator

You can similarly search for Staats- & Gemeindesteuern auf Kapitalleistungen and Direkte Bundessteuer auf Kapitalleistungen in other cantons

Make sure to calculate both sets of taxes and add them together to get the full picture.

Note, for Zurich the rates get quite high once your withdrawal amount gets large. Apparently a significant reduction on the higher rates is due sometime, but I don't know when it comes into effect. The reduction appears to benefit withdrawals in the 500k to 10m range. Some more explanation given here

Edit: I also just found this very neat do-it-all calculator, which previously I assumed only covered the federal (Bundessteuer) but actually covers all Federal tax calculator

6
Afaik Zürich has lowered the taxes this year (as too many people moved their pension funds before retirement).

7
Looks like you're right. I just ran a calculation (using ZH tax calculator ) for Staats & Gemeindesteuer and for the particular details I entered the tax came to 122k for 2021 and 80k for 2022, quite a reduction.

8
If you are withdrawing a lump sum from your pension and you live abroad, you pay withholding tax based on the canton in which your pension fund is based.

https://www.vermoegenszentrum.ch/fin...rsorgebezuegen

The table shows you how much you would pay in each canton for CHF 250K, 500K and 1 M.

To reach 80K in taxes in Zürich, you would have to be withdrawing about 1M.

Does that sound about right?