I have decided to leave Switzerland and go back to Portugal in 1-3 years mainly due to:
Financial Goals mostly met
Changing Family Priority
Discussion with current company where a move with a 30% pay reduction seems possible. This would put me at the same salary as a C-Level at a medium company in Portugal and I could benefit from a special tax program where my true net salary (after taxes, social contributions & expenses) would be on par with my current salary.
Now, where some interesting considerations and your input would be valuable:
I am considering buying a property in a tax advantageous gemeinde, where I would save around 20k in taxes per year. I have checked with UBS/ZKB and keeping a mortgage/property in Switzerland would be no problem if I left. I find the prospect of owning a property in one of the best/safest countries in the world very attractive and a potential source of income in the future.
My second and third pillar funds would cover the downpayment for the property.
Questions:
Is buying a property in Switzerland, while having a C Permit and not being swiss, a good idea if you plan on leaving in 1-3 years? I would hold the property for 10+ years and rent it out once I left.
What makes the most sense for the downpayment, pledging or withdrawing?
I understand that I would pay 5-10% tax on withdrawing my 2nd and 3rd pillar which is most more advantageous to a future rate of 45%+ when I am a Portuguese tax resident.
However, if I withdraw my 2nd pillar, I won’t be able to do additional buyins which will reduce the amount of deduction I have available.
Am I not considering something in the move? Any tips or tricks from people that have left Switzerland on things that I should be doing, should not be doing, optimization, etc.
I’m not sure I understand why you want to buy a property if you plan on leaving soon.
Rental yields are pretty low generally, and renting when no longer in the same country sounds like a headache.
Also, it’s less of an issue (at least for now) as a EU citizen, but having a property does not mean you have right to stay/live in Switzerland.
If the goal is to withdraw your 2nd pilar at an advantageous rate before leaving the country under the pretence of self-occupied ownership, then it is considered tax evasion. (Whether you can get away with it if you’re careful is a different matter).
Sounds like a lot of work given the timeframe, and I’m not sure for what gains.
Why? You have decided to leave, why bother? Owning and renting comes with effort and from abroad is basically impossible so you’d need to pay someone to manage it for you who would eat up most of your (already meagre) yield. You can still move to such tax-friendly canton and rent until you leave.
Just to echo what has already been said by many: why purchasing property which you only intend for future rental use? Of course, it would be different if you were planning on coming back to Switzerland.
As for vested benefits, the canton of Schwyz is the way to go. See here: Canton Schwyz Vested Benefits Account so we can withdraw as we emigrate
Just in case you were thinking of buying property in Schwyz, here’s a short discussion about additional costs: Fees and Additional Costs When Buying Appartment in Schwyz
Just checking, you verified the taxation regime for lump sum withdrawal? (every country is different, but afaik e.g. Germany or France don’t consider it as income and tax it differently, iirc Spain had a fairly high tax rate for those tho).
Interesting. It’s not tax-free per-se. It’s taxed at fund’s level so no double taxation within Switzerland, what you get is after-tax revenue.
So if country has double taxation treaty, it might still apply. Especially because it’s real estate, that ought to be taxed in estate’s country.
Sure, but companies are taxed at the company level too, and AFAIU the REIT level taxes are way closer to corporate taxes than top marginal rates in a lot of the cantons. So at this point I mostly think of REIT and corporate taxes as the same thing.
And while real estate often gets taxed in the country it resides, remember a REIT isn’t real estate, it’s a company. So unless there are special provisions for REITs in the double taxation treaty, there’s likely nothing special about it. Even in Switzerland the REIT has to satisfy certain conditions (e.g. limits on mortgages), and e.g. US or UK REITS do not have any exemptions for Switzerland based investors.
Not an expert, we’d have to analyse Swiss real estate fund with direct ownership legal structure.
Real estate funds with indirect ownership owned by companies are actually taxed at shareholder level, even in Switzerland, and that’s very normal indeed
Ah ok, I wasn’t aware of that, that is good to know.
Property in a good jurisdiction in Europe and income in CHF.
I understand that having a property doesn’t give me a right to stay/live in Switzerland.
My main purpose was to have a property in a country I consider very stable, a diversification move.
Tax is just a secondary consideration that I became aware of recently, I am not buying a property to pay less tax.
Yes, I believe I can take out the over-mandatory portion of the 2nd pillar and all of the 3rd pillar.
I mean, saving 20k year is not negligible, so it was something on top to see if it made financial sense to buy. True, moving is always possible and something we consider.
My investment decision was:
Am I going to buy a 4-6 unit apartment building in Portugal to rent out or
Am I going to buy 1 apartment in Switzerland to live in until I move to Portugal and then rent out?
Good to know that Schwyz is the way to go, I will keep that in mind.
Thank you for that.
It will depend on which tax regime I am able to get when going back.
Programa Regressar → 50% of income is excluded from taxation (still need to pay 11% social security) for 5 years
IFICI (NHR 2.0) → 20% flat tax on income from Portugal, income from abroad excluded from taxation in most countries for 10 years.
From my research (which I am in the process of having validated by a tax expert), withdraws from 2nd pillar are taxed as income. And marginal taxes rates in Portugal get to 48% pretty quickly.
I am not looking for ways to evade taxes but I don’t want to pay more taxes than needed because I don’t have all the information available.
Thank you for all your feedback I hope I answered everyone.
I want to clarify that I am not looking to evade any taxes, I just want to know what are best practices and things to be aware of when moving. I don’t want to leave money on the table for lack of knowledge.
For example, I know that you can import a car IF you have owned it for 6 months & have been abroad for >12 months and pay almost no taxes/fees to import it.
In our case, we don’t own a car and we don’t really plan on buying one for this purpose unless we would save 10k+. Since we don’t see ourselves driving a 80k+ car, the savings are negligible and we already have a sub 10k car in Portugal that gets us from A to B and works.
One of the things that I wonder and perhaps someone knows:
I have been doing additional purchases to my 2nd pillar on a regular basis.
Would a larger than usual buy-in on the year that I leave Switzerland be disputed by the tax authority? (sub 100k for sure and probably sub 50k)
Mit dem Lesen und der Teilnahme an diesem Forum bestätigst du, dass du die Forum-Richtlinien gelesen hast und damit einverstanden bist sowie den Haftungsausschluss auf http://www.mustachianpost.com/de/ akzeptierst.