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Are you planning to leave Switzerland for a few years — or even permanently? If so, you may be able to have your entire pension fund paid out. If you want to optimize your tax obligations in this situation, you should be planning ahead. Here you’ll find out what points are important to know.
There can be many reasons for moving abroad: love, adventure, or the desire to climb the career ladder. Insurance and pension planning are hardly in the spotlight — but those who plan their move abroad carefully usually look to the future with fewer worries. Here we address the most important questions and provide some tax tips about your pension fund or, more precisely, about your second pillar vested benefits.
“From the age of 58 you can harmonize the demands of early retirement and emigration.”
That depends on where you are moving to. If you move to a non-EU/EFTA country, you can usually withdraw your entire pension assets. However, if you’re heading to an EU or EFTA country, however, only the non-mandatory part can usually be withdrawn. But there are exceptions.
Let's start with the normal case: The mandatory part of the pension assets usually remains in your vested benefits account until you retire. You can have paid out the rest, the so-called non-mandatory part. The amount of such a withdrawal is stated in your pension documentation. Or ask your pension fund or vested benefits foundation directly.
See Article 16, Paragraph 1 of the Ordinance on Vested Benefits (PDF in German)
Fundamentally, you will have to pay tax on the withdrawal of pension capital in Switzerland. But with clever planning, you can save on taxes, because your pension capital is taxed at a reduced rate — separately from your other income. You can take advantage of a few special features.
Since you no longer have a domicile in Switzerland after moving out of the country, you will be taxed at source. The “source” is the domicile of the vested benefits foundation that will be paying out the assets. You can benefit from the fact that the withholding tax rate varies from canton to canton. In other words, taxes can be optimized by choosing a vested benefits foundation that is based in a canton with low taxes.
In this example, a person could save around CHF 35,000 by transferring their pension assets to the tax-friendly canton of Schwyz before emigrating.*
* Taxation possibly due at the destination domicile has not been taken into account in this example and should definitely be clarified in advance with a tax advisor in the destination country.
* Please note: Discussions on this subject are currently taking place, and there will soon be a referendum on a revision of the law (AHV-Reform 21 in German), which will only allow freedom of movement after normal retirement age if you remain gainfully employed.
Withdrawing pension assets when moving abroad is complex; many questions quickly arise. Your age, your destination country, and your financial situation are just some of the factors that will influence your planning. We would like to propose giving you some advice in an initial meeting, without any further obligation on your part. This way, you can plan your next steps with the knowledge of our experts.