Mandatory Expenses once FIREd

[xorfish]

That probably refers to this:

A question for home owners who claim a DA-1 refund

The maximal amount you can claim back is: (US-Dividends - (US-Assets/Total-Assets) * Debt Interest) * Marginal Tax rate So for someone who has a home worth 1M with a 700k mortgage at 1%, 400k in US-Assets that had a Dividend of 7k and a marginal tax rate of 25%: (7k - (400k/1400k) * 7k) * 25% = 1.25k This is higher than the 7k *15% = 1.05k that is withheld, so the full amount is claimable.

[Barto]

@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

2nd and 3rd pillar after leaving Switzerland

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 t…

[nabalzbhf]

@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

[Barto]

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

[ChrisL]

Swissinfo.ch had an overview 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 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.

[Barto]

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