Taxation for 3a Fonds


I have recently invested part of my 3a into a 3a-Fond.
Do I need to declare the 3a-Fond an it’s changes in my tax declaration under “Wertschriftenverzeichnis”?

I would guess no as the 3a accounts are not part of the free asset and don’t need do be declared, so I would assume that the dividends, which are reinvested, are also tax free.


You don’t need to declare them in “Wertschriftenverzeichnis”. 3a funds are only taxed on withdrawal.

However, you’ll get a cpnfirmation from the 3a provider at the end of the year about how much you paid into 3a this year, this can be deducted from your taxable income. I don’t know how the section is named, but it should be obvious.

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A common practice is to borrow money and put them into 3a & BVG. By doing this, you can deduct the interest expense from the loan, the contribution to the fund as well as lower your taxable assets for the wealth tax.

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Is it really a common practice ?

The only situation where I could see it make sense is if you can’t max out your 3a contributions without borrowing, but then, you have an income/expenses issue that you are only making worse by adding interest payments on top that will keep reducing your disposable income year after year unless the situation reverses somehow (you get increased cashflows, either from a larger income or lowering your expenses).

The wealth tax changes should be neutral no matter what in that you’d be served as well by selling your other assets than by borrowing. Either you don’t have enough assets to get taxed on wealth and it’s 0% in both situations or you do have assets submitted to wealth tax and borrowing instead of selling them means you keep your assets and incur debt or sell some assets, reaching the same level of net assets, so the same level of taxation on wealth, when all is said and done.

What am I not seeing?

Edit: What I’m not seing:

  • Big buybacks in the 2nd pillar that affect your marginal tax rate or bring your wealth below the taxable level. That’s playing with fire by not having liquid, accessible assets anymore, though, so I’m not sure it’s a net win.

  • Preparing for a forseeable personal bankruptcy, assuming 2nd/3rd pillar assets can’t be seized.


Any mortgage that isn’t paid down below 65% LTV while funding BVG/3a uses the same idea.


To use a simplified example, let’s say all wealth is taxed at 1% and you have 100k of wealth in cash. Then you pay 1k of wealth tax.

But if you put that 100k into pension, then that is not taxed so you have 0 wealth tax.

Another example. You have a house worth 500k. The house is paid off so you have 5k of wealth tax.

You borrow 500k mortgage and put this into pillar 2. You now have 500k house, 500k debt and 500k pension. Pension is not taxed for wealth and the 500k house and debt offset each other so you have 0 wealth tax.

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Yes. That’s mostly my argument, here: selling assets or incurring debt is mostly a neutral operation, at least on a conceptual level (they have diverging fees/cost of opportunity profiles). The advantage comes from having wealth in a tax advantaged vehicle, not from using the debt itself. Unless…

You use the debt to increase the level of what you can invest in your tax advantaged spaces by collaterizing an otherwise illiquid asset. I have a hard time visualizing what would lead to this situation, though, other than inheriting a fully paid off house: it takes a specific mindset to pay off a house instead of amortizing the mortgage to 34% equity and keeping the rest of the mortgage, I don’t think it is that common for someone to change their mind about it and suddenly deciding “you know what? I’ve paid off my house but I’m kind of having regrets now, I’ll mortgage myself back (to the neck, in your example) and put it in my second pillar”.

All in all, I’m not sure it is that “common”. There are fringe cases that can occur in some people’s life that can make it an interesting option but I doubt it is within the plan of most swiss investors (or within the scope of what they are likely to meet in their lifetime).

Of course, I’m only experienced in my own life and could be widly off, in which case, I’m happy to be corrected.

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I guess it is as common as home ownership. I think you’re getting hung up on the path of getting debt and pillar 2 at the same time. Whereas how you get there is irrelevant, only that you either chose to do it or choose to maintain it as such. You can take out your pillar 2/3 to pay off your home mortgage - so if you don’t, you are choosing to hold debt to fund a level in tax advantaged accounts.

I think we are in agreement though, then, it is the framing that was bothering me. Most people who take a mortgage wouldn’t borrow on margin to buy stocks.The thought process is getting a mortgage and then, once the leverage is there, not amortizing it and investing it. I may be giving less credit to most swiss investors than I should, though.

In my understanding, it’s less about “I could incur debt to throw a chunk of money in my 2nd pillar” and more about “I’ll incur debt to buy a home and then keep on investing new inflows as I would have if I didn’t have a mortgage”.

It may be just semantics. I’ll leave it at “if buying a bondlike investment with a tax advantage is the proper thing to do in your investment process, including leverage in the toolbox you are considering, then do it”. For people who want fixed income in their portfolio, the 2nd pillar is a powerful tool.


Exactly. With mortgage rates at 1% or less in recent years, you’d be silly not to lock in as much as you can for as long as you can.

Yes, I suspect it is similar to the ‘trolley problem’ where a non-action doesn’t feel like a choice.

Well, we need to be a bit careful here as using a mortgage to buy stocks is very different from getting margin account on stocks because:

  1. You rarely will get margin called on your mortgage
  2. Even if you can, margin calls on mortage will be less correlated to dips on your stock portfolio than than margin calls on your stock portfolio (typically you get called when stocks are down so you sell at worse point and cause a negative spiral)

So the risk is very much different even though the first level appearance of having debt and stocks appears the same.

I’d actually equate paying off a mortgage to buying a bondlike investment. But it is worth noting that Pillar 2 is not just bonds, it can also contain stocks (sometimes called Pillar 2e). In my case, the Pillar 2e is around 40% stocks.

If I want a bond-like return, I can efficiently pay into Pillar 2 (or 2e) and have the returns be non-taxed and wealth not subject to tax, take a tax deduction at the marginal rate and then withdraw Pillar 2 at a favourable tax rate to pay off the mortgage later (in my case, this also has no carry cost as I fixed my mortgage at 0.75% for 10 years). If your mortgage amount outstanding is high enough, it could even be worthwhile to stagger withdrawals (with suitable waiting period) to minimize the exit tax.

That’s not the kind of framing I was talking about. :wink: What I was talking of was @StolenOrgan’s original phrasing:

That, to me, doesn’t imply having a mortgage and staying on leverage while investing. It implies taking a loan for the specific purpose of putting that money into 3a/Pillar 2 (though I may have misunderstood the intent).

But if you do, the effects can be devastating. Most people feel safer with a mortgage than they should if they don’t have other assets that can carry them through hard times.

But if you need the money, and it’s invested in stocks, you still have to sell them, no matter if they are down. Money is fungible: if you have a margin loan and a fully paid for house and stocks go down to the point of nearing a margin call, you can still get a mortgage to cover the necessary additional inputs.

The difference isn’t so much in the type of loan but in the existence of the house as a collateral at all. If you own a home, the two should be roughly equivalent (interest rate aside) provided you maintain your leverage at the same level. If you don’t own a home, you don’t have access to a mortgage to begin with so the question is moot.

Your risk level is mainly determined by the level of leverage you are exposed to. For the same level of leverage, you can have available mortgage space and a margin loan, or no available mortgage space (a maxed out mortgage) and no margin loan. You can take a new mortgage with your available space to cover for eventual margin needs (up to fully paying it off) if/when needs be.

You can, if you so choose, take on additional risk by having a total level of leverage above the maximal amount available through your mortgage, in which case, well, you are indeed taking on more risk.

Mortgages are safer because they come with a whole lot of mandatory real estate accompanying them. The liquid assets equivalent would be to have a huge pile of government bonds and a 67% margin loan on them. It’s still pretty safe, you’d not have been called in 2022, which was the worst year for bonds so far. The main choice as far as mortgages are concerned is not about investing on leverage or not, it is about owning real estate or not. As a pure way of leveraging other investments than real estate, mortgages are awful tools because of the level of undesired real estate investing tied to them.

Occupational benefit plans are an obligation that your pension fund has toward you to provide agreed upon benefits. A contract. It very much behaves like a bond issued by your pension fund, with a variable coupon (and, like corporate bonds a chance of failure).

That’s exactly the “trolley problem”: someone says, but I didn’t choose to kill 3 people. I just didn’t pull the lever to divert the trolley and allowed it to run over the 3 people!

You’re saying he didn’t borrow money to put it into his 3a. He just happened to let the money stay in the 3a and not pay of the mortgage!

I agree money is fungible. My point is if you get a margin call on your house it is because house prices fell. If you get a margin call on your stocks, it is because stock prices fell. With margin loan on stocks, when you get called, it is when your stocks are low. If you get a call on your house, it is because the house price is low, not the stock price, so you could still be able to sell stocks at a high price to meet your margin call. (I grant that in reality, there could be some positive correlation still, but it would not be 1:1).

Pension can be composed of different parts. In my case for the 1e portion, the pension fund will simply pay out a lump sum on retirement equal to the value of the investments.

Point taken.

In other words, diversified assets help to reduce the chances of being whipped down in case of bad events. That’s not a property of the mortgage, that’s a property of the assets. You can have diversified assets with a margin loan too.

Point taken too, I have generalized my own situation. In the context of the original @StolenOrgan’s intervention, I would guess 1e isn’t to be considered common, though.

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