# Mandatory Expenses once FIREd
**URL:** https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586
**Category:** Life Hacking
**Created:** [December 12, 2018, 12:59pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586 "2018-12-12T12:59:55Z")
**Posts on this page:** 20
**Page:** 4
### Author:  [@xorfish](https://forum.mustachianpost.com/u/xorfish)
#### Post date: [March 20, 2021, 8:23am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/62 "2021-03-20T08:23:40Z")
That probably refers to this:
[https://forum.mustachianpost.com/t/a-question-for-home-owners-who-claim-a-da-1-refund/5911/4?u=xorfish](https://forum.mustachianpost.com/t/a-question-for-home-owners-who-claim-a-da-1-refund/5911/4)
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### Author:  [@Barto](https://forum.mustachianpost.com/u/Barto)
#### Post date: [March 20, 2021, 10:39am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/63 "2021-03-20T10:39:51Z")
> [@nabalzbhf](#):
>
> > [@Barto](#):
> >
> > As I understand you will only be able to claim back the WHT if you pay higher taxes in the destination country
>
> Where did you read that?
Referring to WHT on 2nd pillar withdrawal when leaving CH. I understand you first pay the WHT in CH at a rate depending on the canton where your 2nd pillar fund is domiciled. If the DTA with the destination country says such withdrawal is taxable in the destination country you can claim back the WHT from CH. To do this I understand you need to demonstrate that you have declared the withdrawal in the destination country.
When I made the statement above but I was assuming the tax in the destination country is almost always going to be higher than the super low Swiss WHT. Perhaps I am over simplifying and there are some countries with lower rates? In addition I realised am not sure if it is a requirement to demonstrate that you declared the withdrawal in destination country or just to prove you are resident
There was some discussion in this thread
[https://forum.mustachianpost.com/t/2nd-and-3rd-pillar-after-leaving-switzerland/736/5?u=barto](https://forum.mustachianpost.com/t/2nd-and-3rd-pillar-after-leaving-switzerland/736/5)
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [March 20, 2021, 10:50am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/64 "2021-03-20T10:50:21Z")
> [@Barto](#):
>
> Perhaps I am over simplifying and there are some countries with lower rates? In addition I realised am not sure if it is a requirement to demonstrate that you declared the withdrawal in destination country or just to prove you are resident
Usually pension lump sum have a favorable treatment (iirc for France it’s like 8%), and some countries also may not tax foreign income. So it’s not a given that the Swiss WHT is higher 🙂
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### Author:  [@Barto](https://forum.mustachianpost.com/u/Barto)
#### Post date: [March 20, 2021, 10:59am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/65 "2021-03-20T10:59:26Z")
You are right it is not a given. I stopped looking further as I have a family and am limited in the countries I could realistically move to
The WHT rate In CH is lower, than 8%, especially if the pension fund is in Schwyz
If you move to UK the DTA says the withdrawal is only taxable in CH so no tax to pay in UK. But in this case the DTA means you can’t reclaim Swiss WHT
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### Author:  [@ChrisL](https://forum.mustachianpost.com/u/ChrisL)
#### Post date: [March 20, 2021, 3:58pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/66 "2021-03-20T15:58:40Z")
Swissinfo.ch had an [overview](https://www.swissinfo.ch/ger/auslandschweizer_auswandern-und-pensionskasse--so-spart-man-dabei-steuern/43670970) on countries with DTA, and if tax on 2nd & 3rd pillar can be claimed back. If their information is correct (I have personally no idea), in Canada you cannot, in US you can, in Mexico you can claim it back on 2nd pillar but not from 3rd pillar.
If it is covered by a DTA, it essentially allows transfer of money to the destination and pay tax there without having to pay tax in the origin country as well, respectively the ability of claiming tax back from the origin country once proof is given that the destination country is aware of the money’s arrival. If then more or less tax is paid in the destination country is a different matter altogether and not a concern of the origin country anymore.
The question now would therefore be which countries have a DTA with Switzerland, if the DTA covers 2nd and/or 3rd pillar, and if that country then has a lower tax on it. There is talk in some expat forums that 2nd pillar tax was successfully claimed back after emigrating to Thailand, and no tax had to be paid according to the Thai tax code. The CH-Thailand DTA does not cover 3a however. Here is a [link](https://swisslawnet.com/Pensionskasse.php) to a Swiss lawyer based in Thailand that could advise on this.
I personally do not plan on this, because a) who knows if this is still possible by the time I get to FIRE, b) financial planning that actually needs this to work would be imprudent and c) it is a lot of hassle with my family situation to just get around some tax money. At best it would be a welcome windfall if it / something like it would work out, but I’m not planning for it. If you are single and close to FIRE however, this might well finance 1-2 years of living expenses in Thailand if that is your thing and you have significant 2nd pillar capital.
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### Author:  [@Barto](https://forum.mustachianpost.com/u/Barto)
#### Post date: [March 20, 2021, 6:28pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/67 "2021-03-20T18:28:49Z")
There is an official list of DTAs and discussion in the thread in link above
In general you will have to pay tax on 2 & 3 pillar withdrawal in either CH or the destination country. Usually it is « bad news » if the DTA with your destination country says that the Swiss WHT can be reclaimed because it implies the payout is taxable in the destination country. The rate will almost always be higher than the Swiss WHT and in some cases higher than the tax you saved when initially paying in. This is rarely made clear when salespeople tell you that you can withdraw 2&3 pillar if you leave the country
Sounds like Thailand may be an exception
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [September 9, 2024, 6:26pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/68 "2024-09-09T18:26:12Z")
> [@Direct Residential Real Estate Funds in Switzerland](https://forum.mustachianpost.com/t/direct-residential-real-estate-funds-in-switzerland/13092/119):
>
> AHV contributions
btw are you sure AHV will look at same wealth/income value as tax office? (It’s not necessarily a given)
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [September 10, 2024, 7:47am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/72 "2024-09-10T07:47:36Z")
And do the wealth tax calculation in BL, VD or GE if you want even more pain 😉
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [September 10, 2024, 7:49am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/73 "2024-09-10T07:49:42Z")
> [@nabalzbhf](#):
>
> btw are you sure AHV will look at same wealth/income value as tax office?
Not for me. For AHV purposes, my house is calculated at 385% of tax value.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [September 10, 2024, 7:52am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/74 "2024-09-10T07:52:59Z")
> [@Compounding](#):
>
> Actually, I’m surprised at how low these contributions are. Assuming a 1 Mio. VT portfolio with an annual dividend income of 2% (20k), you’d only pay an annual 3k for AHV/IV/EO (250/month). Not that bad, is it? Or am I missing something here?
AHV is not too bad: it is anyway capped, so the max you will pay each year is 26k.
If you paid a lot of AHV in early years, it is good value as you can try to pay as little AHV as possible and build up AHV contribution years for ‘cheap’.
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [September 10, 2024, 9:54am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/76 "2024-09-10T09:54:24Z")
In Geneva you pay just shy of 100K at 10 million.
> **[Vermögenssteuern im Vergleich| VZ VermögensZentrum](https://www.vermoegenszentrum.ch/vergleiche/vermoegenssteuern-fuer-verheiratete)**
>
> Der Vergleich zeigt, wie unterschiedlich die Kantone das Vermögen besteuern.
The differences between lowest and highest is crazy. Factor of 10
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [September 10, 2024, 10:35am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/78 "2024-09-10T10:35:05Z")
> [@Compounding](#):
>
> Payments for AHV are not mandatory for Nichterwerbstätige (or they’re not enforced, at least). So perhaps it’s a better deal for you to not contribute and invest the money instead.
Is that really the case?
This would make firing quite a bit easier for me. As I count on 0 AHV when calculating FIRE. It reduces expenses by 10% essentially.
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [September 10, 2024, 10:44am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/80 "2024-09-10T10:44:08Z")
> [@Compounding](#):
>
> [Jep](https://www.ahv-iv.ch/de/Sozialversicherungen/Glossar/term/beitragsdauer#:~:text=Bei%2520den%2520Altersrenten%2520betr%C3%A4gt%2520die,1%252F44%2520pro%2520Jahr).), you’ll just receive less AHV for every year you “missed”: **Jedes fehlende Beitragsjahr führt zu einer Kürzung der Rente (1/44 pro Jahr)**.
I‘m pretty sure I‘ll get more longterm return from my own investments.
Guess I‘ll not pay for AHV when retiring.
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### Author:  [@Dr.PI](https://forum.mustachianpost.com/u/Dr.PI)
#### Post date: [September 10, 2024, 9:28pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/81 "2024-09-10T21:28:38Z")
A post was merged into an existing topic: [Direct Residential Real Estate Funds in Switzerland](https://forum.mustachianpost.com/t/direct-residential-real-estate-funds-in-switzerland/13092/125)
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [September 10, 2024, 11:03am UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/82 "2024-09-10T11:03:53Z")
> [@Compounding](#):
>
> Payments for AHV are not mandatory for Nichterwerbstätige
This is incorrect. AHV is mandatory. The only way you get out of it is if you are married and your spouse earns enough to cover you.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [September 10, 2024, 12:53pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/83 "2024-09-10T12:53:30Z")
> [@Tony1337](#):
>
> Guess I‘ll not pay for AHV when retiring.
Open a limited company. Put in something that has similar or better tax treatment than holding it personally. Pay yourself a super small salary for managing it. Pay few AHV, get all contribution years.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [September 10, 2024, 1:27pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/87 "2024-09-10T13:27:15Z")
> [@Tkn](#):
>
> Do you know a real world example for that?
No, I have no need yet. Of course, this is in essence a circumvention. But there probably is enough justification and not enough proof.
Do you see any other problems?
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [September 10, 2024, 1:59pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/89 "2024-09-10T13:59:18Z")
> [@Tkn](#):
>
> In my case, I was unaware of AHV obligation, so I notified them. Got 5 years worth of AHV contribution bills plus late interest. I don’t know if they ever would have found out. But I guess why would they not find out. You’re listed in immigration systems, tax systems etc. Why would AHV not figure that out sooner or later.
That still seems better to have it invested yourself and let it compound, as I imagine the interest is not high?
Just not tell them until they notice, but plan ahead and set aside (or more plan ahead with your portfolio construction) enough for the late payment…
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [September 10, 2024, 2:37pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/90 "2024-09-10T14:37:29Z")
> [@Tkn](#):
>
> Ok guys. I wouldn’t want to run trial and error. Establish a Ltd just for AHV to call bs on it. Would find it better if people make recommendations here backed by real world facts and knowledge. Sorry to be blunt.
Get a lawyer, pay their rate, get advice satisfying your quality requirements.
If not, you’ll take leads from us peasants and then do your own due diligence. Maybe finding information involves you doing something. Go ask AHV directly if you can fulfill your obligation by paying on a small salary in your semi-retirement. Get back with their answer and contribute something. That sound good?
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### Author:  [@1742](https://forum.mustachianpost.com/u/1742)
#### Post date: [September 10, 2024, 2:52pm UTC](https://forum.mustachianpost.com/t/mandatory-expenses-once-fired/1586/94 "2024-09-10T14:52:49Z")
Lots of half-truths in these last few posts, with quite some irresponsible advice 🙄
AHV is mandatory for non-employed. And it is enforced too. Of course, AHV cannot enforce what they don’t know about, and data protection laws (i.e. non-existing intra-governmental data sharing) might absolutely result in them not knowing. It is your duty to take care/report. AHV contributions from any employment must also reach half of the AHV contributions calculated based on non-employment, otherwise the higher non-employment rate applies anyway.
Founding a company to circumvent AHV non-employed contributions is also not going to work, absent some extreme fringe case (ignoring that this act and a fully and permanently inactive/non-revenue-generating company in itself would create some issues).
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