I’m in the market for a Freizügigkeitskonto to temporarily park 6 figures from my pillar 2 account. I plan to move out of country and take it all in cash in a few months. What are the best options for that?
I’ve heard institutions in SZ are highly recommended because of generally low withdrawal taxes there. Any particular recommendations or anti recommendations? How high exactly are those taxes in comparison to Zurich, if anyone knows?
Why do you want to take it all in cash? Why not invest it tax-free?
I will in fact get to invest it tax free as a non domiciled UK resident. But first things first: I need to get it out of the swiss system with minimal losses (taxes & fees)
The thing you will want to look at are the fees charged for early withdrawal due to emigration. For example, the Sparkasse Schwyz charges CHF 25 if you withdraw within 1 year of opening the vested benefits account, and nothing after that. The Schwyzer Kantonalbank charges CHF 800, and Liberty charges between CHF 475 and 950. You can find all fees on the pruduct info pages in this comparison:
https://www.moneyland.ch/en/vested-benefits-accounts-comparison
In any case, Schwyz has the lowest capital withdrawal taxes. If you withdraw after deregistering in Switzerland, capital withdrawal taxes are charged in the vested benefits foundation’s canton of domicile. This is particularly important if you will not be eligible to claim a capital withdrawal tax refund (I’m not sure whether non domiciled UK residents benefit from the double-taxation treaty).
If you withdraw while still resident in Switzerland, then you pay tax where you live. If you are willing and able to move to another part of Switzerland for a while before you withdraw, then Appenzell Innerrhoden is where you will want to be.
Yeah, I’ve seen those ridiculous withdrawal charges at all those big heavily-marketed names that pop up in search, that’s why I was asking
Thanks for mentioning Sparkasse Schwyz! Looks like a great option, I’ll give them a call
Checked out Sparkasse. Their Freizügigkeitskonto product for private persons is done through Unabhängige Freizügigkeitsstiftung Schwyz who want 400 CHF for withdrawal. 25 CHF fee is actually for something else, doesn’t apply in my case
I suppose it’s still cheapest compared to SzKB (800 CHF) and Liberty (475 CHF), but still a tad expensive
Anyone knows a better option?
My research so far:
Seems like Sparkasse is so far still the cheapest no-surprises option. But that’s still gonna be 400 CHF.
They are not based in SZ. Their Wir Bank is Basel based.
Well… 0.4% in the worst case! Lucky you, you can cash it out.
Lucky indeed. I will also cash out pillar 1. Or at least about the half of it that they will let me - the rest they want to keep to feed old swiss geezers and i get no right to complain, its a take it or leave it kind of deal
To my knowledge UK resident are not eligible for a refund of withholding tax (though I assume that means it’s taxed favourably, if at all, in the UK).
pkPRO is a pension fund, not a Freizügigkeitsstiftung.
Ah, interesting. I oversaw this moment. So they have a separate Tellco Vested Benefits Foundation for FZG accounts. Are you with them, have any experience?
Conditions mention account maintance and closure is free. But possibly 600 CHF for “Withholding tax certification (following moving away from Switzerland)”…
No personal experience, sorry.
Update on Sparkasse: according to their fantastic account opening form, they are ONLY interested in customers with 250k+ cash to bring (ok) AND who want to invest that cash into their funds (not ok!). Unserious customers who just want to temporarily park a little bit of cash hoping to get it out of swiss paying just 400 Fr and SZ tax will be shown the door - no options for them on the form
Guess I can strike them off my list and the choice is obvious where I’ll take my money.
Hi All
As has been said elsewhere on the forum the tax treatment of 2nd & 3rd pillar lump sum withdrawal when leaving Switzerland depends on the Double Tax Agreement between the destination country and CH.
It could be helpful to capture the knowledge about each country in one place and this thread has the most obvious title. I will go first
UK: per the DTA the 2 & 3 pillar payout is not taxable in the UK
https://www.englishforum.ch/finance-banking-taxation/279375-uk-tax-swiss-pension-withdrawal-2.html
Conclusion: if you withdraw your 2 or 3 pillar after moving to UK there is no tax due in the UK. You do however need to pay the source tax in Switzerland. The rate depends on the canton where your 2nd pillar institution is with Schwyz being the lowest.
I am really interested to know how it works in Spain if anyone knows
In case it helps anyone I found a circular from the Swiss tax authorities listing Double Tax Agreements by country and how they relate to the source tax charged in Switzerland
Recap: source tax is charged in Switzerland when you have left the country and withdraw 2 or 3 pillar. For countries where the document says “Prestations en capital: Retrocession possible? Oui” this means that the swiss source tax can be reclaimed under DTA (“retrocession”). This is actually bad news because it implies that the lump sum is taxed in the destination country
Example UK
«Prestations en capital - Retrocession possible? – non » : Means that the source tax charged in Switzerland can’t be reclaimed. This is “good news” because per the DTA the capital payment is not taxed in UK (see prev. post) so you only pay the reduced Swiss rate
Example Spain
«Prestations en capital - Retrocession possible? - oui » : The source tax charged in Switzerland can be reclaimed. This implies the capital payment is taxable in Spain which is also confirmed in the DTA. What is not clear is at which tax rate…
Thanks a lot for that. I found the same document in German from kanton ZH. In my case (Greece) it’s a yes.
In addition, the double tax treaty of Switzerland and Greece states:
“Article 18
Pensions
Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a
resident of a Contracting State in consideration of past employment shall be taxable only in that State.”
Given that in order to cash out 3a early, you’d need to be a permanent resident of another state, and that the 3a payment is taxed to the state you reside in, it turns out 3a should be avoided altogether for most people wishing to withdraw their 3a early, right?
Unfortunately I did my first 3a payment last year so there is no going back, but at least it is only 6.8k and I can stop making payments anymore. Is there some sort of loophole around that at least? Can you cash out your 3a simply by leaving Switzerland and not registering in your new country? Or if you stay over 6 months in that year in Switzerland?
Cheers!
Indeed for 2 & 3 pillar it would be nice to get the money back and pay less tax than was initially “saved”
Here are the ideas I heard about so far:
Also in the case of Spain I read that if you want to withdraw the mandatory part of 2nd pillar the swiss pension institution needs a confirmation that you have registered in Spain and are not subject to social security. So no option to “forget” to declare it. I do not know if the same applies to the extra mandatory part of 2 pillar or to 3 pillar.
FYI mandatory part is regulated and can rarely be cashed out when moving to EU so it’s expected.
For the supplementary part, it seems to be a popular move to somehow omit to declare in the new country (which is at least ethically questionable). There’s likely little enforcement since my understanding is that those are not (yet?) covered by the data sharing agreement with tax authorities.
I wouldn’t want to be audited by the new residence country though 
edit:
Might be definitely worth it (e.g. malta) for a few months depending on the amounts. Also even if it’s taxed, check what the tax rate is, sometimes it’s not very high (pension payment are often not counted as regular income).
Thanks for the info Barto it’s interesting and maybe I’ll change my back to Spain…I dont want to pay a lot of taxes in Spain (23% I think…) for my 2,3 p.
Maybe go to UK (I dont like ) or another country with lower fees that Spain…