Withdrawing 3a pillar when leaving Switzerland

Banks, Insurances & Third Pillar
1

Hello all,

we are about to leave Switzerland permanently by the end of this year, I have some funds in 3a pillar (nothing extraordinary, around 40k). If I understood correctly leaving the country allows to withdraw these funds prematurely, however I was not able to find out what (if any) taxes are applied on such withdrawal by Swiss fiscal authorities?

Also, I am thinking if it’s worth to make contribution towards 3a pillar for this year and do the “rectification” next year (after we leave). Are there any special conditions for contribution which are withdrawn in short time span?

2

If you leave Switzerland you can withdraw all your pillar 3a assets without limitations. You will pay the capital withdrawal tax. If you withdraw while you are still registered in Switzerland, the tax will apply in your canton of residence. If you withdraw after leaving Switzerland, the tax will apply in the canton of the retirement foundation which holds your pillar 3a assets.

For 40k, the tax will be pretty low, as it’s a progressive tax. The capital withdrawal tax is just a fraction of standard income tax. You can expect to pay around 1500-2000 francs, give or take. This will be deducted before you get the money paid out.

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3

You may also have to pay tax in your destination country, depending on the dual tax agreement. Regards contributing this year I doubt your cantonal tax authorities would let you claim a deduction at a high rate to then withdraw it at low rate in the same year

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4

The presence of a double-taxation agreement is an important consideration. You can use the interactive map here to find out if the country you are moving to has a DTA which covers the pillar 3a: Auswandern und Pensionskasse: So spart man Steuern - SWI swissinfo.ch

There is no limitation with regards to contributing and withdrawing in the same year. As long as you earn an OASI-elligible income, you can contribute to the pillar 3a. Withdrawals do not affect this.

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5

…depending on which you may be eligible for a refund of Swiss tax withheld.

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6

As far as I know you can withdraw it, even the pillar 2, if you are not a EU member moving inside the EU.
For example if you are Russian you can withdraw or a Spanish moving to Canada.

If you do so I recommend to look for a tax optimization. I heard that moving your residence to Schwyz was the best option, but no idea

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Pillar 3a assets can be withdrawn regardless of your nationality and which country you move to. The rules are different for the second pillar.

Tax optimization is only relevant if you are not moving to a country with a elevant double-taxation agreement with Switzerland. If you move to a country with a relevant DTA, you can reclaim the Swiss withholding tax by proving that you tax resident in that country.

If you move to a country which does not have a relevant DTA, then transferring your pillar 3a assets to a retirement foundation in a low-tax canton ahead of withdrawing them can be a good move. However, for 40,000 francs of pillar 3a assets, the tax differences may be negligible. Schwyz is generally the most favorable canton for all pillar 3a asset brackets.

An important consideration is whether your current pillar 3a foundation charges fees for transferring assets to a different foundation. Many do, and the fees may be so high as to nullify the tax advantage of transferring to a different canton. Some foundations charge fees for irregular withdrawals ahead of retirement age, so this is also important to look at.

You can find some of the fees charged on the detailed product information pages here:

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Citizenship is irrelevant with respect to withdrawals upon moving to an EU/EFTA member state.

Non-mandatory benefits (from pillar 2 and pillar 3a) can be withdrawn if one leaves Switzerland for good.

Mandatory benefits (pillar 2, not pillar 3a, by definition) will remain locked in Switzerland as long as the person is subject to compulsory occupational insurance in the new EU/EFTA member state (or any other Swiss eligibility criteria for withdrawal are met, e.g. withdrawal for home ownership, death), irrespective of citizenship.

If the person subsequently ceases to be subject to compulsory insurance or moves to another non-EU/EFTA coubtry (Russia, Canada, Brazil), he or she will become eligible for withdrawal.

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You will likely be able to pull it off, though you will lying to the government (and the pension fund/vested benefits institution).

PS: I suppose they might (and will only) come after you if you‘re later applying for welfare or use your move for abusive tax „optimisation“ (i.e. voluntary contributions to your pension fund and corresponding tax deductions in later years).

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