Interesting and worrying: The expert group assessed that the preferential tax treatment of pillar 2/3 capital payouts is neither justified from a tax system perspective nor proportionate as a fiscal measure. This is they highest category of what they recommend to change!
What they are proposing is not to completely abandon the preferential tax treatment (of 1/5 of the usual rate on state level and similarly low levels of cantonal taxes), but to harmonize it with the taxation of somebody who choses the annual rent payout. They don’t explain how exactly, but I imagine something like this (as an example for Zug):
Today:
- 500’000 CHF capital payout is taxed at ca. 28’900 CHF (or ca. 5.8%, which is only about 27% of the over 100’000 CHF of taxes you would pay for an ordinary taxable income of that amount)
- 500’000 CHF at the current conversion rate of 6.8 (which of course you likely don’t actually get for the full amount, only for the mandatory part) turns into an annual pension of 34’000 CHF, which together with a maximum AHV pension of 28’440 turns into a taxable income of 62’440 CHF for which you pay 4’413 CHF of taxes (or ca. 7.1%)
With their recommendation:
- 500’000 CHF capital payout for taxation is taxed at a (fictious) 7.1% instead of the current 5.8%.
The difference might seem low, but that is because it is Zug based which taxes low income very low. I did the same math for a 1’000’000 CHF capital payout and the tax rate increases from 6.3% to 15.2% (i.e. nearly 90’000 CHF of additional taxes). In cantons with high taxation of lower incomes the increase might be even steeper.
References: Report pages 54/55 and Appendix 1 pages 16/17. Their specific recommendation:
Die Expertengruppe hat verschiedene Varianten geprüft und schlägt vor, den Steuersatz für den Kapitalbezug auf Bundesebene so festzulegen, dass (möglichst) die gleiche Steuerbelastung wie beim Rentenbezug resultiert. Die Kapitalbezüge werden dazu auf eine entsprechende Jahresrente umgerechnet und zum übrigen Einkommen addiert. Daraus ergibt sich der dem Einkommen entsprechende Steuersatz, mit dem die Kapitalbezüge besteuert werden.
PS: They only talk about capital payouts when retiring at at retirement age. It is not clear what would apply in case of an early WEF withdrawal; certainly that couldn’t be taxed together with the usual working income.
PPS: They also assessed all other preferential tax treatments (and I must say I mostly agree), and they also flag the non-taxation of capital gains, which means they think it should be further investigated and potentially changed (while abstaining from outright recommending that).