Early retirement, move to another country and pension fund withdrawal (pillar 2 and 3)

Hi everyone,

I’ve been following this community for a while but this is my first time posting.

I am considering pulling the plug in six months time. A lot of fear and apprehension at walking away from a very high-paying job, but that would be a topic for another post. I’m now starting to get serious about modelling taxes etc.

In particular, I have questions about withdrawing pillar 2, and I’m thinking there may be people in this group that could advise on options. I’ll probably hire a tax advisor to go through this, but I’d like to be as informed as possible to start with:

  • I’m currently living in French-speaking Switzerland and plan on moving to Spain to be closer to my family.
  • Withdrawal of a pension lump sum in Spain is taxed as income, so withdrawing a lump sum while being resident in Spain is a no-no.
  • Thus, I’m looking to understand what tax-optimised workarounds I could find for doing this. One option that comes to mind would be to move to neighbouring France in the coming months, retrieve the money, and only then move to Spain, at which point the money would be considered as wealth and not income. Or this might actually not be necessary if I weren’t considered as resident in Spain for 2021 if I move late in the year, although I still need to investigate this in more detail. The devil is in the details and any mistake could cost me very dearly as almost half of my wealth is in pillar 2.

As I think through the options I have some questions and I’d appreciate answers from anyone that has either done it or has practical knowledge of the procedure:
* What kind of documentation would the pension fund require to allow retrieval of the money? Would it be enough to provide proof of leaving the country, or would it require proof of domicile in the new one? And what kind of proof?
* Has anyone gone through the full process and how long did it take?
* Once the pension fund accepts releasing the money, does it need to send it to a bank account in the new country or residence, or could it be a bank account in Switzerland? I think this is important as any large sum entering a Spanish bank account would immediately raise scrutiny from Spanish tax authorities and I’d rather not have to deal with that.
* What is the most favourable canton tax-wise for opening the vested benefits account upon leaving my job?
* Any other solutions to minimise tax on this operation? Note that moving to a country other than Spain for a period of time would not be practical for me as I have children that need to go to school, unless it’s neighbouring France.
* Any first-hand recommendations for a reliable tax advisor on this topic? (French or English speaking)


Not that I can help you much, but if you move to spain or any other EU country you will be able to withdraw only the “surobligataire” part. Since you say that you have a high paying job, I’m guessing this is most of your lump sum anyway.

Search the forum for the generic way to do it. The best canton is Schwyz or Zug I believe, but you have to be a resident of the new country already, otherwise it will be you French speaking canton taking the bite off your money.

Ideally you move to a no tax country. Like UAE. But you being Spanish, have you thought about Portugal? Great fiscal deal and you’ll be close to family.
Lastly, beware of the spanish wealth tax which is levied basically everywhere but in Madrid as far as I know.

Lastly, as pas as your planning, think about what you want to do with that money and how to tax-optimize your investments when you get to your new country of residence.

Congratulations on having the balls to take the leap! Let us know how it goes.

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Thanks Ed for your reply.

Are you sure that to move the money to a vested account in Schwyz/Zug I need to already be resident of another country? I thought that if I stop working while still in Switzerland I could choose any domicile for my vested account - is that not true?

To your suggestion about moving to other countries, indeed Portugal or Italy would be so much more favourable. However that wouldn’t get me living in the same city as my aging parents - main reason I want to do this - so I would not consider those options right now.

And I’m not yet sure I have the balls (among other things because I’m a woman :wink: ), right now I’m at the stage of giving it serious consideration and figuring out exactly the amounts, processes etc. I’d like to get to a final decision by the end of next month. I must say I’m finding it quite stressful though.


So technically to withdraw you’d need to (afaik) be no longer a swiss resident (but indeed to move to vested account just stopping to work should be sufficient).

Some people do things like withdraw after deregistering and not declare it in the new location (I don’t know how prevalent it is, unless there’s an audit the new country of residence would likely not know that it’s new income from after the time you no longer were a swiss resident).

When doing things properly I think France has a low-ish rate (Pensions de retraite |impots.gouv.fr says 7.5%, not sure if there’s some extra contribution on top though) and the swiss withholding tax should be recovered fully (so might not even need to move to a low withholding canton). That said I don’t have personal experience so don’t take my word for it :slight_smile:

Probably would also require the timing to be right (and having cross border employment might trigger some special cases).

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I have the same idea about moving to Spain so I am very interested to share knowledge. I tried to recap everything I learned here

To get the money out the best options I have been able to figure out are:

  1. move in an intermediate step to a country where the Dual Tax Agreement says the payout is taxable only in Switzerland. Refer to the comments and link in that post. For example UK, or possibly Andorra. To optimise this further you can move the 2 pillar to Schwyz before leaving

  2. Become independent before leaving CH which allows you to withdraw and pay tax at a 2nd pillar rate depending on your canton. I was told it is relatively easy to demonstrate self employment, you need to provide a couple of contracts that might only be for a day’s work each. I haven’t looked into it yet.

The risk is that by the time we end up moving, none of the above makes sense for similar reasons as you outline and we decide to swallow the Spanish tax, which means it was not a good idea have to have topped up 2nd pillar or contribute to 3rd pillar…

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Do double check. There’s often preferential tax treatment for withdrawal of pension benefits (though maybe in Spain there isn’t).

Depends on the fund / foundation.
Some do not insist on proof of domicile, depending on the case.

Depends on the fund. Though in principle there’s no issue in paying to a Swiss account. You can have or keep a Swiss bank even if living abroad. It doesn’t matter regarding taxation (…for Switzerland, that is! Some countries may tax on remittance basis or similar where it does matter).

The canton of the vested benefits foundation doesn’t matter much - unless withdrawing when (already) resident abroad AND the withholding tax is not refundable (depending on the applicable double taxation agreement). For many countries it is refundable as long as you have proof of delcaring to your foreign country of tax residency. This seems to be especially strict with France.

Schwyz is well-known low-tax canton for vested benefits institutions with low withholding tax rates on withdrawals from institutions domiciled in the canton. Unsurprisingly a couple of institutions have set up shop (or their P.O. box) there that are specialised in doing so. On the other hand, they’ll often charge a couple of hundreds for withdrawals that would be free elsewhere.

Withholding tax applies to payments when you are already resident abroad.

I think there’s no specific legal requirement to wait until then though. I think I have heard of vested benefits institutions paying out before the date of deregistration from Switzerland - in which case you would still be tax-resident in Switzerland at the time of payout (and accordingly only pay Swiss taxes on it - according to cantonal rates).

…unless you are not subject to mandatory insurance in the new EU country of residence (which is and needs to be determined according to that country’s social security laws after you‘ve been living there for a couple of weeks/months).

In the case of Portugal, for instance, if you’re not actually employed there, chances are rather high you won‘t be subject to the insurance requirement and will thus become eligible for a full withdrawal of Swiss pension benefits (as opposed to France).


Tho if you haven’t deregistered it shouldn’t be taxed with the withholding tax but the regular lump sum taxation of pension benefits (which depends on where you live, not where the fund is).

Would be interested to understand how these VB insitutions make sure the criterion of leaving the country is met. My employer’s pension fund told me I needed the leaving certificate from my canton before payout and FinPension similar.

Perhaps the payout happened for the other criteria which are still possible whilst CH resident ?(withdrawal for home ownership or self employment)

Exactly. Edited above for clarity.

Which you can (often) get before you‘re actually gone.

You‘re going to leave at the end of April? Pay your tax bills in time, go talk to the tax office, convince them that you want to leave with a clean sheet and pay your tax obligations (including for the pension fund withdrawal), and they‘ll often give their OK to the municipal admin to deregister you effective April 30. Could be weeks in advance.

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Applies to you anyway! Read “courage” If you prefer :wink:

As for the rest, the guys hear have made a better job than I would’ve nuancing what I’ve said.

Question : what are your professional plans while in Spain? Working? Fire?

Good point about the leaving certificate. My employer and Finpension also both told me the payout could only happen after the departure date (so 1 May in your example). Would be great to know the VB who might pay it out before

Thanks Barto, we should definitely compare notes!

Option 1 would not be practical for me, unless it’s moving to neighbouring France while still employed. which would be feasible if not super comfortable.

Option 2 seems interesting although it’s probably not that straightforward.

Also, I found the following on Spain’s tax residency rules (source: https://taxsummaries.pwc.com/spain/individual/residence):

"Individuals are resident in Spain for tax purposes if they meet at least one of the following criteria:

  • Spend more than 183 days in Spain during a calendar year. In determining the period of stay, temporary absences are included in the count, except when the tax residence in another country can be proven. Special anti-avoidance rules are established for tax havens. Temporary visits to Spain to comply with contractual obligations under cultural and humanitarian collaboration agreements with the Spanish authorities which are not remunerated are not included when calculating the 183-day residence period.*
  • Have Spain as their main base or centre of activities or economic interests. It is presumed, unless proven otherwise, that a taxpayer’s habitual place of residence is Spain when, on the basis of the foregoing criteria, the spouse (not legally separated) and underage dependent children permanently reside in Spain. Spanish PIT law contains specific anti-avoidance rules regarding this matter.*

Persons who do not meet any of the foregoing criteria are not resident in Spain for tax purposes. In such cases, Spanish-source income and capital gains in Spain are subject to NRIT.

Under Spanish law, the concept of part-year resident does not exist. An individual is either resident or non-resident and is taxed as such for the entire tax year."

The last sentence is interesting to me, as they say that part-year residency doesn’t exist in Spain. Thus, I’m wondering whether I can assume that I would not be a resident in 2021, and just file a tax declaration in 2022. I would need to confirm this hypothesis with a Spanish tax advisor though.

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From the information I found online, it is taxed as income with some mitigation. From that information I calculated it’d get taxed at around 35-37%, which it were to happen would ruin my whole plan.

Yep - in my case I’d much rather pay the Swiss tax than the Spanish one!!

I appreciate your taking the time to share all this information.

Yes, having left Switzerland once already, I remember you can request the departure certificate up to one month before the departure date. You do need to submit your taxes, and I guess that when you actually get the certificate will be a function of how quickly they review your submission. In my case I did not file the taxes on time, so I can’t say how quick they would have moved if I had.
But all this doesn’t leave much wiggle room if something is delayed in the process - for example the pension fund takes forever to process your request.

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Yep I understood, it was a little joke.

I’d like to initially take some time off to spend time with family and friends and doing things I enjoy: music, gardening, walks in nature, learning something new etc

Later on I’d have to see how my investments are doing and whether I feel like taking up some revenue-generating activity…

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I am pretty sure they wouldn’t let us have a gap after ceasing to be resident of Switzerland before becoming resident of Spain

It might be worth following up on San Francisco’s suggestion about payment on provision of leaving certificate before final CH departure date and calling a couple of specialist Vested Benefit providers in Schwyz to see if they permit this. I doubt they would advertise this on their websites since if true it seems a loophole at best. Finpension don’t do this and I don’t think VIAC either

Here is the CH-ES DTA in French - article 18 confirms pensions are taxable in the country of residence. (You can find the Spanish version online too)

Hi @Contemplation . I’m in the same situation. I plan on moving to Spain to be closer to my family in 4-5 years

I don’t want to pay a lot of taxes in Spain from my 2 pillar. For the moment maybe the only safe solution is move to a no tax country (Australie, Belgique,Danemark,England,etc), take the 2 pillar (maybe 3 too).
I think (if someone can confirm please) that for that list of no tax country I’ll only pay the source tax in Switzerland(canton of finpension,viac)

After I’ll go go to Spain.

I appreciate your taking the time to share all this information with next steps and advices.


Hello everyone,

wish you luck in your FI/retirement/joining the family plans!

Don’t know if it will be useful, but, as a side note, it is possible to move 3rd pillar account to 2nd pillar (pension savings) without any tax consequences (at that stage!)


If I understand this document from Deloitte 2nd & 3rd pillar would be taxed at 10% with Portugal NHR status. Much better than Spain (Catalunya 48% on amounts >175k Euros)

Foreign source pensions (including periodic and lump sum payments from life
insurances policies, pension funds, retirement savings plan and other
complementary social security regimes) are liable to a 10% flat rate with the
possibility of offsetting the taxes eventually paid in the country of source.”