Not necessarily, talking for Greece one needs to be a resident for minimum 6 months either there or elsewhere to change their tax status, and then the applications to do that are only possible Jan-Mar every year, so in practice the system itself may be shooting itself in the foot by being very rigid.
Again, for Greece you wouldn’t be, you’d be a Swiss tax resident, just not a Swiss resident. Edit: realising I am contradicting my post above, but having spoken to a tax advisor they said that “falling through the cracks is actually legal if you don’t try to fudge the dates and be a ghost”. You’re just playing by the rules of the system, and the current system seems to allow for it. Ultimately in cases like these, and only these, I’d take the view that being legal clears any ethical dilemma I may have.
Could have maintained a Spanish account while being a resident and citizen of Spain before coming to CH, perfectly legal.
It all depends on the jurisdiction, rules applied for determinining tax residence and any DTA that might exist.
My understanding is that when relocating from Switzerland, even though deregistration etc. may have taken place, an individual remains tax resident in CH until they register for tax in their new domicile - although I can’t find a link to any official text confirming that
Hi, I am new here and was looking for the details of taxation for the 2nd and 3rd pillar mainly about Greece that was already mentioned by @Mirager and surprisingly thought about the same aspects before started reading the whole discussion here. Let me clarify:
For sure in the case of Greece, and I think (or at least I thought) in most countries, the rule of 183 days per year is what essentially determines in which country you pay tax.
Based on this observation, I would like to ask what happens in the following case: I work in Switzerland until October 2024, I deregister from Switzerland, and then take a break or even start working immediately in Greece, and in the period between November and December 2024, I withdraw money from 2nd and 3rd pillar in Switzerland, and I pay tax at source in Switzerland. In that case and assuming that the money is fully withdrawn by 31st of December 2024, why should I pay any tax in Greece? AFAIK I need to pay tax in Greece only for income in Greece. I don’t know if Greece handles 2nd and 3rd pillar as income or as capital, but I don’t see why Greece would ask me to pay any tax for 2024 for foreign income or foreign capital. The problem starts only if I withdraw money in 2025 or later because then I will pay tax for everything in Greece.
This case sounds too obvious to me and apparently to @Mirager but after spending hours looking for 2nd pillar withdrawal, I didn’t see anybody mentioning that the fiscal residency doesn’t change immediately. I don’t think Greece is a special case in this sense. Then what is missing here?
My other concern is about the very interesting article from NZZ shared by @BigVern. I quote part of the article:
During this period, during which the person moving can continue to live in Switzerland as a tourist, the pension capital is transferred back to their home country. When they subsequently register at their new tax domicile, the increase in assets in their bank account has already taken place.
This comment focuses too much on transferring the money from Switzerland to the destination country (Spain), but the point is not that. The point is whether the destination country has the right to tax you.
Why does it matter when the money is transferred to the other country? For sure as long as I am a fiscal resident of Switzerland, at least Greece cannot ask me where I found the money transferred to my Greek bank account, but even if Greek authorities ask, what is the problem? I would say the truth.
The problem that I understand is whether the destination country has the right to ask you paying tax for the 2nd pillar withdrawal or not. The answer to this question, in my understanding, is independent of whether the withdrawn money is transferred to a bank account outside Switzerland.
In other words, withdrawal of 2nd or 3d pillar implies that the money needs to be transferred to a foreign bank account? What if I want to keep everything in my Swiss bank account?
Any comments are really appreciated, thank you all for the great discussion.
Hmmm don’t forget that you can’t take the 2nd pillar’s mandatory portion if you leave CH for an EU country, which Greece is, until you’re 65. How did you miss that? Θα μας τα φαει το δημοσιο
That’s not true as I understand it. You still need to declare as long as you’re a Greek citizen, you’re just not taxed if you’re not a home taxpayer as CH and GR have a double taxation treaty. Regarding whether CH doesn’t allow you to withdraw to a CH bank account, but needs to send to a foreign one I really don’t know. Some friends said with C permit it’s fine to keep here, some said with Swiss citizenship it is, I don’t know because I haven’t researched it.
If you’ve registered as a home tax resident then they can and will.
As much as I’ve thought about it the only 100% clear legal option before 58 for 3rd pillar and 65 for 2nd pillar is moving to a non-EU country and withdrawing 2nd and 3rd pillar, getting taxed there however much it is, a tax haven as @PhilMongoose said, and then doing whatever you want. The grey option is (only applicable to the 3rd pillar before you’re too old to wnjoy any of the money) is leaving CH and withdrawing it, if it’s possible, BEFORE becoming a home tax resident in Greece. But it’s not crystal clear in my opinion. Given it’s not the 90s anymore I think the system is sophisticated enough to raise a flag for investigation even today, let alone in 10+ years from now. A third option which is both clear and doesn’t let any money fall in the grubby hands of Greek public sector clerks who work maybe 1.5 day per week is buying a house here and using the 2nd and 3rd pillars for that. But I mean, come on, mortgage, debt, illiquid asset, lack of interest on my side, better set the money on fire than waste it on walls. Or you can stay in CH until you’re 65 but by then does it really matter anymore?
The key point for me is that for expats who are 100% sure they will not die in CH it may make a ton more sense to minimize 2nd and 3rd pillar contributions and only invest in a liquid account and accept you’ll just pay the pensions of lazy public sector workers in Greece and to feed μιζες with your pension from here.
Dear co-forumites, apologies for getting heated, but our country of origin has a habit of severely punishing law-abiding, hard-working folks. If you knew how much we’re taxed, and what’s done with these taxes you’d be incensed too
That’s correct the mandatory portion stays in Switzerland unless you don’t go to EU/EFTA countries.
That’s not true as I understand it. You still need to declare as long as you’re a Greek citizen, you’re just not taxed if you’re not a home taxpayer as CH and GR have a double taxation treaty.
If you’ve registered as a home tax resident then they can and will.
Why? If you are a fiscal resident of Switzerland for 2024, Greece cannot tax you for income that comes from Switzerland for that year. I thought you said that in your previous comment:
Not necessarily, talking for Greece one needs to be a resident for minimum 6 months either there or elsewhere to change their tax status, and then the applications to do that are only possible Jan-Mar every year, so in practice the system itself may be shooting itself in the foot by being very rigid.
I am not sure if we are on the same page or I misunderstood. In the meantime I found out that tax obligation in Switzerland ends the moment you de-register(?) as explained in Leaving Switzerland - moneyland.ch
This essentially creates a kind of gap in your tax residency if you leave from Switzerland after working for more than 183 days, because for the rest of the year the destination country doesn’t assume you are a tax resident there, and if Switzerland doesn’t assume you are a tax resident either, then which country is the tax residency for the rest of the year?
Just a clarification, personally I am talking about what is the legal way to do those tax optimizations properly. I am not interested in taking the risk and hide the truth from any state, which nobody knows how will evolve in 10 years from now. I prefer an easy going life.
There’s an interesting post from Mr Chevrolet (the financial advisor in the NZZ article) where he responds to a question around the legality of the option to cash in the pillar 2 after deregistering in CH & prior to registering in your new domicile. He states “I have developed this model and it works, over 250 satisfied clients that have left Switzerland are a solid proof. And of course absolutely legal.”
Now that’s just his word, but presumably if this approach to avoiding tax were illegal, with so many people doing this, wouldn’t there be reports all over the internet about prosecutions etc?
I don’t think that’s generally correct (tax residence and registration aren’t tied, both to figure out which Gemeinde/Canton should tax but also internationally), but as mentioned unless you attract attention nobody will care. (Switzerland will probably be satisfied enough with the withholding tho your former place of residence might feel cheated that Schwyz got to get the taxes instead of them)
Not exactly, I said Greece can’t tax you while you’re a foreign tax resident. What we’re going in circles on is whether one can fall through the cracks by spending time here or there while not even being able to become a fiscal resident there (the 183 days spent abroad + the time it takes to be classified as a home tax resident, and what happens in this time), and what proof will the Swiss authorities will require before releasing the funds. If they require proof of address that’s easy, if they require proof we have social insurance and/or tax residency…we’re already cooked.
Regardless, I’ve made up my mind I don’t like illiquid assets, I’ll be talking to 3-4 fee-for-service (and expensive ones) accountants a couple of years before it’s time to leave
I see. That’s a good point, what are the required documents so that 2nd or 3rd pillar are released by Switzerland after the registration. Perhaps 3rd pillar doesn’t require many documents because it doesn’t matter what is the destination country, but for the 2nd pillar I would expect Switzerland will ask for some clear evidence of moving there.
I’d expect them to be the same, or if not right now to become equally strict in the future.
I feel the days of “mustachian” lifehacks (like having 5-6 3a portfolios) are numbered given the system will wake up to the fact that this optimization, while being legal by using the system’s existing loopholes, is losing it money.
I’m also interested to know if a Swiss account is accepted, which I think is possible.
In any case, I would be quite worried to send a big CHF amount to a foreign bank which doesn’t have a multi currency account.
Btw, be careful, because some banks bans resident outside Switzerland or apply huge fees.
For exemple, neon has a fees of 40.- per month…
Some banks recommendation for swiss abroad
BCGE will charge minor quarter fees for citizen living abroad.
In exchange of an annual fee, the bank will also generate a mandatory foreign. tax statement for your countries of residence (eg. IFU for France).
Yes, this was the extra-mandatory part of the pillar 2.
No idea if the money could be kept in a Swiss account (I transferred it internationally as I have finished with Switzerland), but also don’t see what the benefit of keeping the money in Switzerland (other than in the vested account) would be.
Hi Mirager,
I’m thinking of Greece or Cyprus with my Greek GF. If, hypothetically, one was to retire before the Swiss pensionable age and take a lump sum from one’s pension - any idea if that lump sum is taxed?
Sorry, probably to detailed a question, but perhaps you know?
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