Leaving Switzerland and withdrawing 2nd pillar (pension)

[Barto]

“ If you’re moving to an EU/EFTA country, generally only the supplementary portions of your pension assets can be withdrawn. If you are not subject to mandatory insurance in the country you are moving to, you can also withdraw the obligatory portion of your assets.”
UBS summary

Means that you may be able to withdraw the mandatory part in the EU too if you are not subject to social security. For example in UK, if you are not working you are not subject to social security so it was possible to withdraw the whole 2P (although uk is obviously no longer part of EU/EFTA)

[boschika]

@Raisa

speak for yourself… u r so underpaid lol

You might want to replace or fix your keyboard, it looks like some of its keys are non functional.

[boschika]

@nabalzbhf

I guess there are lots of different scenarios, for people earning more than 100k the non-mandatory can becomes fairly large quickly (the mandatory part only covers up to 86k).

(so it’s not a question of whether there was an extra buy-in or not)

Interesting, so the mandatory part is only on 86k, but If you’re earning more, you’re also paying on the part above 86k which you’re allowed to withdraw then? I hadn’t realized that.

[dbu]

It also looks like we have kylin’s twin brother on the forum.

[nabalzbhf]

Yes, and only like 65k out of those 86k is covered. So if you earn 140k, already half is non-mandatory.

[boschika]

@Barto

“ If you’re moving to an EU/EFTA country, generally only the supplementary portions of your pension assets can be withdrawn. If you are not subject to mandatory insurance in the country you are moving to, you can also withdraw the obligatory portion of your assets.”
UBS summary

I wonder if there are any EU countries where you’re not subject to mandatory insurance when FIREd and drawing on investments. I also wonder what kind of insurance we’re talking about, is it state pension schemes?

[San_Francisco]

@boschika

but If you’re earning more, you’re also paying on the part above 86k

Not necessarily / mandatorily.

@nabalzbhf

if you earn 140k, already half is non-mandatory.

…if the pension fund plan actually provides for non-mandatory contributions.

@boschika

I wonder if there are any EU countries where you’re not subject to mandatory insurance when FIREd and drawing on investments

Pretty sure Portugal is one. I believe that even the unemployed aren’t subject to mandatory insurance there (at least when moving to PT from abroad).

I couldn’t tell or point to the law that does say so, so I can only provide anecdotal insight. But there are many Portuguese living in Switzerland. And most of them seem not subject to the insurance requirement upon moving to Portugal.

As opposed to France, for instance, where almost everyone seems to fall under the insurance requirement (though of course an early retiree is an exception in itself and possibly may not).

[Mr_Zack]

@Barto

Some other treaties are different. CH-UK DTA says lump pension payouts are only taxable in the state where the pension scheme is established. In your example if moving to UK instead of LU the only tax to pay would be 5% tax in Schwyz, no tax in UK.

Hi Barto, does that mean then, whilst living in Swizerland, I can take the 25% Tax free lump sum (after 55 years old) from my UK pension and not be taxed on it by Switzerland - suppose only Wealth tax will apply then?

[nabalzbhf]

@San_Francisco

…if the pension fund plan actually provides for non-mandatory contributions

I’d be surprised if with such salaries there are companies not insuring the full salary. Do you know of any?

[boschika]

@nabalzbhf

I’d be surprised if with such salaries there are companies not insuring the full salary. Do you know of any?

My cheap employer does that. They’re a class act.

[San_Francisco]

@nabalzbhf

Do you know of any?

I do.

Though I agree that major Swiss employers will be unlikely to do so. There are also financial incentives to offer or shift a part of compensation to occupational benefits rather than paying it all out as taxable salary for higher earners.

[nabalzbhf]

Isn’t it an easy 10% comp bump to switch to an employer with a nicer 2nd pillar? I’m always amazed by how little 2nd pillar is taken into account when getting an offer (I think sometimes it’s even hard to have any info…).

[boschika]

Yes, can’t wait to leave. It was my first contract in CH and I had no idea about these things then. Also, it was all in German which I speak very little of.

[Barto]

@Mr_Zack

Hi Barto, does that mean then, whilst living in Swizerland, I can take the 25% Tax free lump sum (after 55 years old) from my UK pension and not be taxed on it by Switzerland - suppose only Wealth tax will apply then?

Yes I believe so. Only UK income taxes would apply. I believe you would also benefit from the UK personal allowance whereby the first £12,570 of income is not taxed in UK (whether the UK will continue to allow non residents to benefit from personal allowance after Brexit is another question)

[Cheeselover]

It would be interesting to know when you claim the withholding taxes in case of moving to a Non-EAA country with a DTA, can you have the amount transfered to a Swiss account and keeping them there?

[boschika]

I don’t think so, claiming the tax at source just means that your destination country subtracts from the amount you owe however much was withheld by Switzerland on the payment. It’s not really refunded by Switzerland, they keep the tax they took. That’s my understanding anyway.

[San_Francisco]

@Cheeselover

when you claim the withholding taxes in case of moving to a Non-EAA country with a DTA, can you have the amount transfered to a Swiss account and keeping them there?

Not sure what the exact question is, but you can have a bank account everywhere.
So why shouldn’t you be able to receive the fund on a Swiss (or third-country) bank account?

Location of bank account generally doesn’t mean much with regards to taxation (with the exception of remittance-based systems, but these generally only trigger on domestic accounts).

@boschika

It’s not really refunded by Switzerland

The forms ask for a bank account to wire the refund to.

If it’s refundable, it’s refundable.

(As a side note: the oft-discussed offset (“subtraction”) of foreign tax withheld on dividends through form DA-1 generally applies to non-refundable foreign withholding tax - whereas any refundable part of foreign withholding tax on dividends would need to be claimed directly from the foreign tax authority. The documentation requirements often make this quite cumbersome and expensive though. And common investment fund domiciles such as Ireland, Luxembourg, the UK, or even the US with W8-BEN typically don’t charge us refundable withholding taxes on distributions from funds).

[dom.swiss]

@Barto

And did SZ pay back the full amount?

It is an ongoing process and it will work like the test I did with pillar 3a (but with lower resulting taxes). The tax authorities in Luxembourg will stamp and sign form Q-IS, as shown in the article. I expect the reimbursement of withheld taxes in Dec 2022

Kapitalbezug von Säule 3a im Ausland

[Barto]

Very helpful, Thanks.

Interestingly the form Q-IS you linked dated 2019 does not make the same mention of Malta as in the 2021 form that I linked above (it suggested Maltese authorities had to confirm pension had been remitted to Malta which I understand would have triggered Maltese taxes). The form on ESTV site is the 2019 version. So perhaps the Malta option that was suggested does exist
[Edit: I just checked, the Q-IS form on the Geneva tax website requires Maltese authorities to confirm pension has been remitted to Malta ]

[jorgel]

So here is my situation so far:

Living in Switzerland for a couple of months. Starting to work immediately after in Germany.

3rd pillar:

With my de-registration form of the Gemeinde which I already have, it’s possible to cash out before leaving, my bank has confirmed this. This forum helped as I moved it out from VIAC (little collaborative in cashing out, only when you have already left), to my bank (more collaborative).

2nd pillar

I plan to cash out the non-mandatory part (non BVG), but my company has confirmed that this will happen only when I leave the country (thus when I’m officially a tax resident in Germany).

Questions:

• What is the fiscal treatment in Germany for the cash out of the 2nd pillar? My investigations in the forum point to a full capital gain tax (around 28%) over the full amount, given that the 2nd pillar monthly contributions in Switzerland are tax free.

• What is the fiscal treatment in Germany for the cash out of the 3rd pillar? Here I think I don’t need to pay taxes in Germany but not fully sure.

Thanks for any tips or help! (even some expert tax advisor on this)