What countries would be ideal? Andorra? Thailand? Any resources on that?
If you end up being non-dom, I think countries following british system can be interesting (e.g. Malta, etc.) since foreign income is not taxed.
otherwise if you don’t use the foreign income tax advantage but the pension fund advantage https://www.oecd.org/pensions/Stocktaking-Tax-Treatment-Pensions-OECD-EU.pdf page 14 has a table to start exploring (they key point will be to make sure the country recognizes the swiss funds as tax advantaged)
2 Likes
Getting more off thread here, but if he doesn’t have a residence/ “Wohnsitz” because he is travelling for years (a) why would he want to file for taxes (b) on what basis would any country base a claim that he should pay taxes there? (income from real estate excluded. And the US of course which taxes for the mere privilege of holding their passport)
Look into the laws of various countries and you will find various provisions that make you liable to tax in various corner cases.
2 Likes
Banks and financial institutions will ask you for your country of tax residence and will report the data to tax authorities through automated exchanges.
Becoming residence-less was explored in this thread
Summary: if you haven’t established residence in another country,from a swiss tax perspective you are still resident in CH. Whether the swiss authorities will come after you is another matter.
3 Likes
CH-UK Double Tax Agreement says pension lump sum withdrawal is not taxed in UK. You pay the 4.8% withdrawal tax in Schwyz and you are done.
3 Likes
How did you figure out which countries let you withdraw 100% of the second pillar and not only the surobligatory part? I know EU/EFTA only gives you surobligatory. But what about other countries? Is there a list somewhere of countries where you can get 100% of the 2nd pillar back and the local tax rate + DTA situation?
Is the 4.8% progressive or the max?
All you need to know. The restriction on payout applies only to EU and the EFTA member states of Iceland and Norway (Liechtenstein somewhat unsurprisingly being an exception due to prior bilateral agreement) and depending on your social security status.
…if you are subject to compulsory (similar) insurance somewhere in these member states. If you are not, you’re still eligible for payout of entire amount.
Move to, say, Portugal and don’t take up employment there: you will most likely not be subject to mandatory insurance and can have the full amount paid out.l (note that other member states may be stricter in terms of defining mandatory insurance).
3 Likes
I have a similar situation to the OP, where, after living in CH for the past 15 years I will be taking early retirement & want to move (with my pension lump sum) to Spain where I already have property. I understand that withholding tax is payable in CH, but I would like to minimise how much tax I pay in Spain, particularly since this would be clearly a case of double taxation.
I have a couple of questions that I hope contributors to this forum can help with:
-
I have read the suggestion in the NZZ article where it mentions de-registering in CH, cashing in the lump sum & transferring to the destination country (in this case Spain), but staying in CH for around one month as a tourist. But surely the arrival of such a large sum of money in a Spanish bank account so soon after de-registering in CH and just BEFORE registering for Spanish tax will raise suspicion with the local tax authorities?
-
I understand that the UK has a different arrangement with Switzerland than the EU/EFTA, which means under Art 18.2 of the double taxation treaty between the two countries. As a UK citizen if I become UK tax resident then no UK tax is payable on lump sums received from Swiss pension schemes. However, since my ultimate destination will be Spain, but wishing to avoid any additional taxes, how long would I need to remain UK tax resident before registering as tax resident in Spain?
Pensexpert has just published a short article around lump sum taxation considerations in the large neighbouring countries (mentions Spain in passing).
Would withdrawing while still registered in Switzerland be really that punishing?
To put things into perspective, Schwyz the canton is always advertised as the “ideal” Stiftungssitz if planning to withdraw from abroad - but most Stiftungen are actually based in Schwyz the town (rather than e.g. Wollerau) where the communal part of the tax charge is rather high.
Edit: this applies to residents only, for non-residents see my post below.
1 Like
You’d need to use it because you’re reaching retirement, are creating your own company, or for a real estate purchase.
I don’t think you can say you want to withdraw because you’re moving abroad in the future (for that you need to have moved abroad already).
1 Like
I was assuming BigVern has reached ‘regular withdrawal age’ already, although not explicitly stated.
Thanks EPeon. I understand that I cannot withdraw the pension lump sum until I de-register in Switzerland.
I also understand that Spain will class the pension lump sum as ‘‘earnings’’ if I register for tax in Spain before I transfer the money to a Spanish bank account, and therefore I would expect to be hit with a big (around 50%) tax bill in addition to the withholding tax already paid in Switzerland.
So my first question was could the Spanish authorities get tax on the pension lump sum if I did the following?
-
I de-register in Switzerland on say, 1 August (& spend the rest of the month touring CH)
-
I transfer the pension lump sum to my Spanish bank account on say, 15 August
-
I arrive in Spain on 1 September and registered for tax there
Thanks nabalzbhf
I’m 58, so could only withdraw the non-BVG amount (if I understand correctly)
The tax calculator you linked to is for residents of Schwyz (canton).
The reputation as a „Stiftungssitz“ comes from its low rates applied at source to non-residents.
These rates are not the same.
You‘d have a gap of one month of having no tax residency anywhere.
Could a Spanish tax office argue that you were already tax resident there, just „late in registering“. I‘ve got little doubt about that (especially considering that Spain - like many other countries - charges capital gains tax). The potential for abuse is to obvious and great. As you say: the amount may raise suspicion.
Would they actually do it in your case? No idea. Depends on how keen they are on looking into it and enforcing the supposition that you must have tax residency somewhere, I guess.
…depending on your social security status in the new country.
But you‘ll be unable to prove you’re not subject to compulsory insurance (and thus eligible for withdrawal of the BVG amount) within one month of deregistering.
4 Likes
You are correct, the commune doesn’t appear to get a share if withdrawal occurs from abroad. For anyone interested, here are the Schwyz actual tax-at-source rates.
1 Like
Thanks for posting the link (I meant to do it in my post above - but it didn’t work).
Not only that - if I’m not mistaken, the canton also applies its tax multiplier (120% for 2023) to residents. Whereas only the base rate is charged to non-residents at source.
1 Like