I thought that you can contribute to the pillar 3 but unless the person is not working it will not be tax deductible. but you can always contribute.
Technically you can falsely answer the 2 VIAC questions and indeed contribute as the OP found out.
Legally, I don’t know what happens. You definitively cannot deduct it from your taxes, but what will happen when you want to get it back out later?
Taxe department reply to us that we have to close the account (as it was created in a year it would not allow deduction) and take the money out. They insist on that. I guess they cannot force you and the only thing that will happen is that you will pay tax again on this money when you get it out, so you will have paid twice, as you got taxed on it the year you earn it and put it in 3a without tax deduction and taxed again to get it out.
Maybe you can then proof that you did already pay tax on this money (or a part of it) and they might deduce the part of the tax matching the amount but it will be overly complicated for no gain at the end.
A more complicated case could have happened. In 2019 my wife still had some income, if we would have open the account this year or before and just continue to add money in 2020 before figuring out she would not get any income this year, we would have to get out only the added money in 2020. But as it’s Finpension (VIAC or whatever 3a with equity and very variable interest), the money send could have increased or decreased until it’s withdraw again and mixed with all money added before. So let’s say someone would be in a situation that he had income until 2018 and can have a 3a, with year it add up some money let’s say 50’000frs, before the end of the year the person stop working and is not more eligible to 3a (but didn’t know that as there are no checking that you still have income linked to a 2nd pillard). Then in 2019 the person kept it’s automatic transfer and added 5’000frs. The person would deduce in it’s 2019 taxes and in April 2020 he would get a letter that he is not allowed and should withdraw the money. The money was in a 3a with high equity share, March 2020 everything crash, the total is even less than 50’000frs. What will happen? He have to withdraw 5’000frs? or the result of what would have been the 5’000frs if there was not money from before 2019? I guess the second case.
Then the person get out only 3’000frs something and hopefully he will be quick to open a trading account and place this money to recover the losses. (Or bought Bitcoin and send flower to tax department a year later).
Think could have been much worst than our situation. Now we asked to close the account, we had a positive return (will see at exactly which rate Finpension sell everything) and then we will get the money back on our account, ready to invest again. I hope the process will not be too long. We will surely start by filling up my 3a, to at least get the tax deduction this year and then invest the rest (but maybe not in Bitcoin ahah).
It happened to my. My wife was in a maternity leave and extended 2 months extra unpaid leave.
That year we contribute to the max in both pillars and instead of the ~6.3 she was entitled to only put 5k.
but I understood from the tax department that I can use a paper that they provide to request to remove the money from the pillar 3a but it was optional in any case.
It’s tax evasion as you pay neither wealth nor dividend taxes on 3a accounts (and the tax on withdrawal may be less than the saved taxes). Whether the tax authorities will find out and fine you is another question. However, the potential benefit (if any) is likely very small, depending on marginal tax rates, 3a fees and the market performance, so there wouldn’t even be a reason to risk it.
I have overpaid 3a a couple of times in the past and have withdrawn the extra amount based on the letter from the tax authorities. If I remember correctly, there was no need to send a confirmation of this withdrawal to the authorities (Kt. ZH).
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You can‘t.
Links to evidence have been provided above.
Three times, possibly:
- Paying income tax on your income (that couldn’t be deducted)
- Paying income tax on your 3a contributions while they‘re invested in your 3a account (overcontributions are not tax-privileged)
- At payout. Though then, if I‘m not mistaken, you don‘t have to, if you can prove you‘ve paid taxes earlier.
For clarity‘s sake: Interest and dividend payments (and accrued dividends in accumulating funds) are taxable for income taxes even if they’re in a 3a account - if and when they’re resulting from overcontributions.
…and then pay taxes on dividends or interest.
See here for Berne.
„Steuerpflichtige, welche eine Rückerstattung nicht veranlassen, unterliegen dem Risiko eines Nach- und Strafsteuerverfahrens“.
Also: „Bankstiftungen, die unter dem Titel der gebundenen Selbstvorsorge höhere Beiträge als diejenigen, die der Abzugsberechtigung entsprechen, entgegennehmen (…) verlieren den Anspruch auf Steuerbefreiung“
Great arguments - 100% logical and presented like that I am in full agreement.
Exactly the same here with the additional point that my bank reversed the money automatically. I didn’t do anything so the tax authorities must have also contacted the bank.
Ops, I will contact then my pillar 3 and request to refund it
What do you mean by that? My impression was that it is encouraged through income taxes to only marry if one partner is not working. Only then will your tax burden be reduced. Both partners working? Pay extra! In Poland the progressive income tax thresholds are doubled for married couples, thus making 0 difference if both earn the same, but a big difference if one partner earns a lot, and the other a little/nothing. In Switzerland: both earn the same => pay more tax, one not working => pay less tax.
Yes I agree, it complicates matters a lot when married households file a joint tax declaration. I live with my gf without marriage and we are taxed separately, why can’t married people do the same? But I’ll one-up your idea: with linear tax and no deductions, there would be no difference if the partners were married or not.
And to push it to the limit, I believe personal income tax is complicated and should be abolished, taxation of work should be abolished and the government should look for money elsewhere. Being employed should not come at a cost and one should not have to file a complicated tax declaration and learn tricks to deduct this or that. I hate it.
This is true for federal income taxes and for cantonal taxes in some cantons. Some cantons have the same laws as Poland, so it isn’t true for those.
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