Pillar II funds for property in EU

Real Estate
1

Unfortunately due to circumstances out of my control I’ll need to leave Switzerland in early 2026 after seven amazing years. I’ve read from MoneyLand guide that it’s possible to use Pillar II funds to cover half of the 20% downpayment when buying a home anywhere in EU - as long as it will become the primary residence.

As I’m currently in Switzerland, my local bank in Latvia asks for 50% downpayment.
In this case, could I cover 25% of this 50% with the Pillar II funds?

In addition, I understand that once I were to go back then I only have 6 months to “decide” what to do with the Pension II funds (after proving that I’ve indeed deregistered) - afterwards the Pillar II becomes locked until I reach retirement age. Is that accurate?

That would mean, I would not have the option to use the left-over funds from Pension II pillar to renovate something 5 years from now on, right?

If there are anyone here who have purchased their main primary residence outside of Switzerland, I would really like to hear about your experience and how did it go. As I am unclear on the order of events.

Thank you

2

How does Latvia tax pension withdrawals? If very heavily, then getting the cash out for the house before leaving Switzerland might be a good thing.

3

No, the 6 months is just the deadline to move out of your ex employer fund (but even then they don’t get locked, they just go to the default foundation).

Seems odd to use 2nd pillar for a residence abroad while you’re still registered in Switzerland.

1 Like
4

Not if you buy it in anticipation of moving.

1 Like
5

Thanks, I didn’t know if it would work for non CH résidence as well.

Btw OP I don’t think there’s a limit on how much you can pay with 2nd pillar, if it’s allowed you could pay 100% (and not just down payment)

6

9 posts were merged into an existing topic: Leaving Switzerland and withdrawing 2nd pillar (pension)

7

I don’t understand. 2nd pillar money withdrawal is allowed for primary residence. Are we saying this residence can be abroad too?

8

As long as it’s the primary residence yes.

Tho I assume foreign residence are mostly for cross border commuters. The case from OP is probably not very common since anyway the pension gets unlocked when they change domicile anyway. (I don’t really expect tax to be an issue since the canton of current domicile will be happy to get the money rather than the canton of fund domicile if it gets taxed after leaving)

4 Likes
9

It’s common enough, as you get plenty of EU citizens who work here for a while and then return to an EU country. You also get a fair number of Swiss who move abroad to EU countries.

Basically, the legal requirements are the same as for property financing in Switzerland. It used to be that you could withdraw all your benefits simply on account of leaving Switzerland. But since Switzerland made a social security agreement with the EU, that is no longer possible for the mandatory part of pension benefits. Now the same rules for withdrawals apply in the EU as in Switzerland.

But Swiss banking guidelines do not apply (e.g. maximum 50% of downpayment payable with pension fund, etc.). Also, the required entry in the land registry only applies for Swiss properties.

3 Likes
11

Thank you for the responses everyone. I’ve done some additional reading on this matter, and considering the information provided in this thread I understand the following (please correct if I am wrong) :

  • It is indeed possible to use Pension II fund for primary residence in EU
  • I may need to first relocate back to EU country and rent something, to prove this country is indeed now the primary residence?
  • Deregistration document from Switzerland is not needed for this process, meaning I can do this as the last activity
  • The Pension II fund can be used fully, not just the half of the 20% downpayment requirement
  • As there are double-tax treaties in place, I shouldn’t worry about getting an extra surprise bill - especially since the Pension II funds are taxed in Switzerland and the payment goes directly to notary
  • The payout from Pension II funds to notary may take 2-4 weeks
12

I don’t think it’s that simple and definitely needs to be checked for your specific situation.

3 Likes
13

I doubt you need to rent. I am not sure that deregistration is not needed (I’d have assumed it is). I would worry about extra surprises and I would research carefully if I were you.

1 Like
14

Indeed, I will consult with local tax/customs board and with some Switzerland tax advisors to get concrete details in writing. Though it will be in couple of months, as I’m in early stages of this research.

Once I’ve got the full details and have gone through the entire process - I will make a very detailed guide here to assist anyone else in similar situation.

6 Likes