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Old 13.07.2015, 17:43
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Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

To anyone who has Pillar 2 & 3 savings and is leaving Switzerland permanently. And especially for those leaving to non EU countries.

Once savings are withdrawn they are taxable. Tax rate varies according to the Canton and is implied according to the location of the pension\saving fund registration.

The tax level varies significantly and hence it pays off to transfer the funds before retrieval to a pension fund registered in a lower tax canton and enjoy the tax benefits.

I found this info at the web , checked with my tax advisor which confirmed it . A relevant company providing such service , see :http://www.liberty-vorsorge.ch/)

I have not tried it myself but seems credible.

N.


for example
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Old 24.07.2015, 17:14
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

To clarify the post above, Switzerland will tax your withdrawal based on where your funds are at the time of withdrawal. If you're from the USA, you should have been paying US taxes on your employer's deposits and on interest earned every year! Depending on how long you've been here and how much you've accumulated, the benefit from these pension companies (typically located in Schwyz or Zug) may not be worth the costs. There are fees to the account, and there may be other restrictions such as when you can withdraw. Some have online calculators so you can see how much you might save. I haven't been in CH very long, so the potential savings in taxes wasn't worth the costs and hassles. For others, it may be a great deal of savings. I didn't inquire at any of the companies to find out if they have restrictions for US citizens.

Since I'm leaving the country, the pension funds will transfer directly to my personal bank account and then I can use Transferwise or another lower cost transfer company to transfer funds to my USA bank account, thus saving the fees from having the pensions send directly to the USA. As an American, though, UBS will only allow me to keep my personal account for 60 days after deregistration.
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Old 27.10.2015, 23:38
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but i do heard there is no fees on vested benefit accounts.

And even when you withdrawl it when you are no longer in CH, you might be able to claim the double tax treaty rate

Last edited by 3Wishes; 27.10.2015 at 23:49. Reason: merging consecutive replies
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Old 02.09.2016, 09:42
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

We were just told we need to provide a letter as well stating that both spouses agree to withdrawing the pension and have it notarized. Has anyone else had to do this?
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Old 02.09.2016, 13:47
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

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We were just told we need to provide a letter as well stating that both spouses agree to withdrawing the pension and have it notarized. Has anyone else had to do this?
Anyone who is married has to get approval from their wife & if your single you have to prove this. A spouse has a financial interest of 50% of the pension for each year of marriage.
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Old 02.09.2016, 16:26
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

So if I hang on a few years and Brexit occurs I can withdraw my Pillars too.

On a separate note can I use the funds in the pillars to finance a property purchase overseas if we remain in the EU?
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Old 02.09.2016, 16:35
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

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So if I hang on a few years and Brexit occurs I can withdraw my Pillars too.

On a separate note can I use the funds in the pillars to finance a property purchase overseas if we remain in the EU?
I received my pillar 2 in cash aged 52 after leaving for the EU. It depends on if your required to be insured in the country you go to.

Yes if it's a main residence however you you get the money after the purchase as it has to be your main residence & the money can NOT be paid to a solicitor, however can be paid to a bank to reduce or pay off a mortgage.
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Old 28.10.2016, 13:25
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

Hi all

I am currently in the process of using Liberty to transfer my pension from Zurich to Schwyz. We are heading back to UK and we'll be using it on a mortgage in UK once we've found something when we are there. Process looks very simple and the tax is reduced from approx 6% in Zurich down to 2.5% when I have it withdrawn into the mortgage, saving me a little but enough to do the effort.
There are fees of approx 600chf by Liberty but it's still worthwhile for what I save.

Vin
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Old 10.01.2017, 19:41
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

Reviving an old thread, I would be interested to know how this went for you and how UK inland revenue treated the funds derived from the pension
I have asked the question formally with HMRC twice and have two different responses.
a)Tax in UK, reclaim tax paid in CH
b)Tax at source in CH,no tax burden in UK

Tax treaty states the following and was referenced by both responders.

Notwithstanding the provisions of paragraph 1, a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State.

This reads to me that Switzerland is First contracting state and that UK is "other" state - therefore no additional uk tax - specifically for lump sum once resident in UK

As a lurker I know FMF is likely to advise, interested in any experience before I seek clarity for a third time.
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Old 10.01.2017, 20:07
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

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Reviving an old thread, I would be interested to know how this went for you and how UK inland revenue treated the funds derived from the pension
I have asked the question formally with HMRC twice and have two different responses.
a)Tax in UK, reclaim tax paid in CH
b)Tax at source in CH,no tax burden in UK

Tax treaty states the following and was referenced by both responders.

Notwithstanding the provisions of paragraph 1, a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State.

This reads to me that Switzerland is First contracting state and that UK is "other" state - therefore no additional uk tax - specifically for lump sum once resident in UK

As a lurker I know FMF is likely to advise, interested in any experience before I seek clarity for a third time.
It can be complicated, depending on when the pension was earned & how much work was done in the UK during that time as tax avoidance measures against UK tax payers who got paid in foreign pensions were enacted about 5 years ago.

In most cases of an employee working in CH there will be zero extra tax to pay in the UK I don't have the files with me as I am away from home but there is a Statutory exemption that will partly or fully apply. I did spend more than a full day researching this, HMRC probably won't know the correct answer immediately!
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Old 10.01.2017, 20:46
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

Thanks,

Your opinion of HMRC knowledge of this scenario reflects my own experience - relationship with local office and a clear written response before expensive error methinks.
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Old 10.01.2017, 21:14
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

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Thanks,

Your opinion of HMRC knowledge of this scenario reflects my own experience - relationship with local office and a clear written response before expensive error methinks.
Even a written response won't be worth anything if it's wrong. UK tax is self declaration & assessment , you take full responsibility for your returns, info from the revenue means nothing as many have found out to their cost.
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Old 10.01.2017, 21:28
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Re: Pillar 2 & 3 Funds Extraction Upon Leaving Switzerland Permanently

Agreed, ideally want to be right before I test, or leave it here.
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