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  #121  
Old 27.05.2019, 07:23
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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I am not sure I follow you, FMF. I have read that the Swiss authorities will assess a final tax on the pension asset (when one leaves for the US) and that tax rate is contingent on where one resides canton-wise.

I have never read that this tax can be "reclaimed" from the Swiss tax authorities; I just assumed whatever tax we paid in Switzerland would offset our US tax liability for that calendar year.

Would you clarify? Many thanks!
The Swiss tax is a withholding tax, just like on interest or dividends & can be reclaimed if you choose to have the money taxed in another jurisdiction. Thats what DTA's are all about.

As you have almost zero tax liability in the US on a lump sum withdrawal you won't have anything to offset the Swiss withholding tax against.
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  #122  
Old 27.05.2019, 08:33
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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I am in a similar situation, moving from CH back to the US. I have a professional firm helping with the tax situation and here is what they told me and what is happening:


- They told me to get a departure note from the commune, and with that ask the pension fund to pay out before the date of departure. This way I can avoid US taxation.
- The pension fund said no, we can only pay after the departure date as you need proof that you actually left.
- The professional tax advisors told me this is weird and they never had this happen. They also told me if I get the payout before the departure date I will be liable for CH taxes, which will not be witheld as I have a c-permit and am not taxed at source.
- Now I will be taxed at source with the payout as I technically have departed.
- It will be fully taxed at US rates, but I can take the CH paid taxes as a credit, "only" paying the delta.
- In your case, you say you have paid US taxes on your pension contribution, i.e. you have declared them as income. Therefore you assume you will not be taxed on it again. I would really check this to be sure if I were you.
- Lastly, I was told I will not get a physical refund, but rather can take the taxes paid in CH as a credit to my US taxes. I find this quiet weird, as I am not a Swiss tax resident anymore upon payout. I will need to double check this. In your case it does not matter, as if you would get a refund you cannot take the credit. It is more left pocket/right pocket.
Based on what you wrote here, it seems that your professional firm that is helping you with the taxes is not at all familiar with the US taxation system and how the advice to you should be different than the general advice to everyone else. For instance, the US does not acknowledge the Pillar 2 as a valid retirement savings account. To the US, withdrawing these funds is no different than emptying any other bank account. If you have been US tax liable prior to this move, you have been paying income taxes on 1) your contribution (considered pre-tax in Switzerland), 2) your employer's contribution (also considered pre-tax in Switzerland) and 3) the interest accrued each year. This means that as far as the US is concerned your further tax liability on the money at withdrawal is 0 because you have already paid. (Unless you haven't been, then that's another story.)

When you withdraw the funds, your overall tax liability is governed by the double-taxation agreement. Depending on your tax residency, you can offset the taxes you have already paid against further Swiss tax liabilities or seek a refund for the prepaid US taxes. This is complex and I would suggest seeking specialist help from someone who understands the US-Swiss DTA. It could save you serious $$$.
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  #123  
Old 27.05.2019, 10:00
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Re: Leaving to live in the EU & cashing in a Swiss Pension

I gave the following info from KPMG to our accountant as it is very clear on how Pillar 2 assets/income should be reported on one's US tax return.

https://www.pensionskassen-novartis....Population.pdf
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  #124  
Old 27.05.2019, 10:09
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Re: Leaving to live in the EU & cashing in a Swiss Pension

Just found a more recent tax brochure/presentation from KPMG regarding Swiss and US Taxes. Take a look at page 33...

https://www.prof.uzh.ch/dam/jcr:9693...ion_180305.pdf
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  #125  
Old 07.06.2019, 22:19
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Re: Leaving to live in the EU & cashing in a Swiss Pension

UKGirl wrote "Moving the (not insignificant) Pillar 2 into a low tax canton BEFORE leaving"

What happens if you move your Pillar 2 (vested account) to a low tax canton AFTER leaving Switzerland?
Do you lose the tax advantage on the withdrawal you will do afterwards?
Thanks.
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  #126  
Old 01.07.2019, 16:22
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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Based on what you wrote here, it seems that your professional firm that is helping you with the taxes is not at all familiar with the US taxation system and how the advice to you should be different than the general advice to everyone else. For instance, the US does not acknowledge the Pillar 2 as a valid retirement savings account. To the US, withdrawing these funds is no different than emptying any other bank account. If you have been US tax liable prior to this move, you have been paying income taxes on 1) your contribution (considered pre-tax in Switzerland), 2) your employer's contribution (also considered pre-tax in Switzerland) and 3) the interest accrued each year. This means that as far as the US is concerned your further tax liability on the money at withdrawal is 0 because you have already paid. (Unless you haven't been, then that's another story.)

When you withdraw the funds, your overall tax liability is governed by the double-taxation agreement. Depending on your tax residency, you can offset the taxes you have already paid against further Swiss tax liabilities or seek a refund for the prepaid US taxes. This is complex and I would suggest seeking specialist help from someone who understands the US-Swiss DTA. It could save you serious $$$.

I have an update on this matter. As I filed as a 1040NR I did not "pay" US taxes on my Swiss sourced income, even though I declared the contributions to P2 as ordinary income. I took the treaty.


As such, my professional firm who has since stepped up with a much better service is not comfortable taking the position that taxes were paid on the P2.


However, as I move in the middle of the year and I have a significant tax liability in Switzerland for the first half, as my US tax return will be leading as I will be a US tax resident at year's end I can take use the credit of Swiss taxes paid to offset the tax liability of my P2. So I should be ok after all, but it is very specific to my situation.


I hope I explained it in a sensible manner...
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  #127  
Old 01.07.2019, 16:34
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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UKGirl wrote "Moving the (not insignificant) Pillar 2 into a low tax canton BEFORE leaving"

What happens if you move your Pillar 2 (vested account) to a low tax canton AFTER leaving Switzerland?
Do you lose the tax advantage on the withdrawal you will do afterwards?
Thanks.
It makes absolutely no difference, however it's not a cost free exercise due to fees.
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  #128  
Old 01.07.2019, 22:44
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Re: Leaving to live in the EU & cashing in a Swiss Pension

Thank you for your reply.
Fees are the usual 500CHF that you mentioned earlier in the thread.
I have to do the math but I think it should still be worth to transfer Pillar 2 into a low tax canton prior to doing the withdrawal, especially when one moves to a country where the withdrawals are not taxed (i.e. Portugal) and therefore the CH-Tax at source cannot be reclaimed.
In the meantime I donít feel the urge to withdraw my Pillar 2&3 and to exchange the CHFs to EURs !
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  #129  
Old 02.07.2019, 00:51
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Re: Leaving to live in the EU & cashing in a Swiss Pension

After doing some research, when the time comes to leave CH permanently, we will pay the applicable tax on withdrawal for the Zurich canton as our US tax liability is always greater than our Swiss tax liability. Whatever we pay upon withdrawal will be used to offset our US tax for that given year; it is not really worth the hassle and fees for us to transfer our Pillar 2 to a lower tax canton/domicile before we leave.
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  #130  
Old 02.07.2019, 08:07
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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Thank you for your reply.
Fees are the usual 500CHF that you mentioned earlier in the thread.
I have to do the math but I think it should still be worth to transfer Pillar 2 into a low tax canton prior to doing the withdrawal, especially when one moves to a country where the withdrawals are not taxed (i.e. Portugal) and therefore the CH-Tax at source cannot be reclaimed.
In the meantime I donít feel the urge to withdraw my Pillar 2&3 and to exchange the CHFs to EURs !


If as you state the withdrawal would be 100% tax free in Portugal it's clearly a waste of time & money transferring to a lower tax canton as the withholding tax can be reclaimed.
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  #131  
Old 02.07.2019, 15:51
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Re: Leaving to live in the EU & cashing in a Swiss Pension

Euh are you sure ?
I thought that the withholding tax could only be reclaimed if the money was taxed in the country of residence.
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  #132  
Old 02.07.2019, 16:07
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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Euh are you sure ?
I thought that the withholding tax could only be reclaimed if the money was taxed in the country of residence.
Taxable is the key word.
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  #133  
Old 02.07.2019, 19:35
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Re: Leaving to live in the EU & cashing in a Swiss Pension

I am sorry but I do not get it.
My understanding is following. Please correct me if I'm wrong:

Either 2nd or 3rd pillar money is taxable in the new country of residence, e.g. France.
In CH, you pay taxes in the canton where the pension organization is domiciled
In F, you pay taxes but can deduct the already paid CH taxes.
In this case, it makes no sense to pay fees to transfer your pension moneys to a low tax canton

Or 2nd or 3rd pillar money is not taxable in the new country of residence, e.g. Portugal.
In CH, you pay taxes in the canton where the pension organization is domiciled
In P, you do not pay any tax and therefore are not entitled to reclaim the CH tax.
In this case, it makes indeed sense to transfer your pension moneys to a low tax canton even if it costs you high fees

Thank you for clarifying that matter
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  #134  
Old 02.07.2019, 19:55
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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Taxable is the key word.
It can be taxable but the applicable tax still be 0%.

If the Portuguese tax authorities stamp Form Q-IS you should be able to reclaim the Swiss payout tax. I read that the Egyptians for example will NOT stamp it.
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  #135  
Old 02.07.2019, 20:03
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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It can be taxable but the applicable tax still be 0%.

If the Portuguese tax authorities stamp Form Q-IS you should be able to reclaim the Swiss payout tax. I read that the Egyptians for example will NOT stamp it.
Exactly, taxable does not mean tax needs to be paid, which is my point.
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  #136  
Old 06.07.2019, 15:37
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Re: Leaving to live in the EU & cashing in a Swiss Pension

From what I read on this page https://www.claudechatelain.ch/2017/...t-man-steuern/, the CH withholding tax can be reclaimed while living in the majority of countries.
As aSwissInTheUS mentioned, the difficulty could be to have the form stamped by the local tax authorities.
As far as I know the Portuguese tax authorities refuse to stamp forms written in a foreign language, so it would at least require a professional translation and again some costs Ö
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  #137  
Old 06.07.2019, 19:56
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Re: Leaving to live in the EU & cashing in a Swiss Pension

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I am sorry but I do not get it.
My understanding is following. Please correct me if I'm wrong:

Either 2nd or 3rd pillar money is taxable in the new country of residence, e.g. France.
In CH, you pay taxes in the canton where the pension organization is domiciled
In F, you pay taxes but can deduct the already paid CH taxes.
In this case, it makes no sense to pay fees to transfer your pension moneys to a low tax canton

Or 2nd or 3rd pillar money is not taxable in the new country of residence, e.g. Portugal.
In CH, you pay taxes in the canton where the pension organization is domiciled
In P, you do not pay any tax and therefore are not entitled to reclaim the CH tax.
In this case, it makes indeed sense to transfer your pension moneys to a low tax canton even if it costs you high fees

Thank you for clarifying that matter
I believe pensions are tax free in Portugal, that's assuming they are taxable in Portugal. Paying tax & being taxable are too different things, clearly you should take advise & see if Portugal will stamp the DTA form.

If you had bothered to read mt first post in this thread there is a link to follow. Specific form for Portugal & wait for it in Portuguese.
http://www.verbindungsstelle.ch/docu...ormular_dt.pdf
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