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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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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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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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