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Old 11.11.2016, 21:53
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Will my UK endowment policy be taxed in Switzerland

Hi,

I am just completing my first Swiss tax declaration. I see that I am supposed to include the cash-in value of any life assurance policy. Should I declare my UK endowment policy?

It is supposed to pay out next year. Does anyone know will this be treated for the purpose of Swiss taxes? The pay-out would normally be tax-free in the UK.

Thanks in advance,

Trix
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Old 11.11.2016, 22:00
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Re: Will my UK endowment policy be taxed in Switzerland

Here you should declare the current cash value.

The premiums are tax-free, I think the pay-out is taxed as income.

But why do all this? Can't you forget you have a policy this year, and cash it next year in the UK?
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Old 11.11.2016, 22:03
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Re: Will my UK endowment policy be taxed in Switzerland

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Can't you forget you have a policy this year, and cash it next year in the UK?
I had indeed quite forgotten that I had a policy but I just received a letter from the provider asking in which country I am tax resident, and for my tax number, and saying that they will notify me to the Inland Revenue if I don't reply.
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Old 11.11.2016, 22:05
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Re: Will my UK endowment policy be taxed in Switzerland

Yep- have had to send signed and witnessed declaration with our Swiss tax numbers for UK Bank Accounts too- new regs.
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Old 11.11.2016, 22:16
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Re: Will my UK endowment policy be taxed in Switzerland

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Yep- have had to send signed and witnessed declaration with our Swiss tax numbers for UK Bank Accounts too- new regs.
Amazing as normally people self certify with no requirement for a witness.
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Old 11.11.2016, 22:22
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Re: Will my UK endowment policy be taxed in Switzerland

But is an endowment policy that is linked to a mortgage an "assurance vie" policy that needs to be declared in Switzerland? It doesn't seem fair that this policy that I have been paying for 24 years to pay off the mortgage - which of course it won't - would suddenly be subject to Swiss income tax.
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Old 11.11.2016, 22:25
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Re: Will my UK endowment policy be taxed in Switzerland

Part of your 'fortune' and has to be declared.

FMF - not under new Laws. The letter from both banks said they had to according to new rules - and I had to get signature certified by a professional (with list given) I got the Maire's assistant to certify with Commune stamp- new as from this year, they say.

'To help protect tax systems, governments around the world are introducing a new information-gathering and reporting requirement for financial institutions which is known as the Common Reporting Standard or CRS.
Under CRS we need to understand where you are 'tax resident' which will usually be where you pay income taxes. If you are resident outside the UK we need to share this information and your account detail with HM Revenue and Customs who will inform other tax authorities where relevant.

Ask a Professional to write the following on each document and sign to say they verify them (I .. full name of certifier- confirm etc)

Last edited by Odile; 11.11.2016 at 22:43.
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Old 11.11.2016, 22:28
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Re: Will my UK endowment policy be taxed in Switzerland

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Part of your 'fortune' and has to be declared.
I have no problem with declaring it as part of my "fortune". And I see that the premiums that I pay reduce my tax liability. But will the pay-out next year count as "income" or is it just "savings", hence the payout will be part of my "fortune".
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Old 11.11.2016, 22:31
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Re: Will my UK endowment policy be taxed in Switzerland

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But is an endowment policy that is linked to a mortgage an "assurance vie" policy that needs to be declared in Switzerland? It doesn't seem fair that this policy that I have been paying for 24 years to pay off the mortgage - which of course it won't - would suddenly be subject to Swiss income tax.
Of course the entire payment is not subject to income tax, Sbrinz has little idea on tax matters.
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Old 11.11.2016, 22:37
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Re: Will my UK endowment policy be taxed in Switzerland

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Part of your 'fortune' and has to be declared.

FMF - not under new Laws. The letter from both banks said they had to according to new rules - and I had to get signature certified by a professional (with list given) I got the Maire's assistant to certify with Commune stamp- new as from this year, they say.
I have provided tax info for several UK financial institutions, none required witnessing, however Barclays do want a certified copy of my passport on which my signature is witnessed by the the person certifying the copy.
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Old 11.11.2016, 23:00
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Re: Will my UK endowment policy be taxed in Switzerland

Well don't leave us in suspense, how will a UK endowment policy pay-out be taxed in Switzerland then?

Can tax be avoided in the UK by assigning the policy be to a UK person, and the proceeds be received tax-free by that person in the UK?

Can the OP instruct the insurance company to pay the money to the mortgage owner (Mortgagor?) and reduce the mortgage?

Can the OP ask the insurance company to keep the paid-up policy, and release the funds at some later date?

Your esteemed advice would be welcome.
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Old 11.11.2016, 23:12
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Re: Will my UK endowment policy be taxed in Switzerland

With suitable links please.
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Old 11.11.2016, 23:28
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Re: Will my UK endowment policy be taxed in Switzerland

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Can the OP ask the insurance company to keep the paid-up policy, and release the funds at some later date? .
I hadn't thought of that one....

There is a separate space on the tax return to enter payments from life assurance. I will try putting that into the programme and see whether the total tax due goes up.
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Old 11.11.2016, 23:34
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Re: Will my UK endowment policy be taxed in Switzerland

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Well don't leave us in suspense, how will a UK endowment policy pay-out be taxed in Switzerland then?

Can tax be avoided in the UK by assigning the policy be to a UK person, and the proceeds be received tax-free by that person in the UK?

Can the OP instruct the insurance company to pay the money to the mortgage owner (Mortgagor?) and reduce the mortgage?

Can the OP ask the insurance company to keep the paid-up policy, and release the funds at some later date?

Your esteemed advice would be welcome.
There is no UK tax on a qualifying insurance policy payout regardless of being a higher rate tax payer or not.

You probably did not know that many people use insurance policies to pay off their mortgage in CH, if the payout was taxable it would not work....

Death benefits are included in the policies so they don't count as annuities, and therefore not taxable.. If you loose all your money in a BEERS scheme it's not deductible either.......

Just think about this, there is no CGT tax on investment in CH so if you invested money every month in a fund you would not be taxed when you cashed it in. Why would anyone ever buy an insurance policy to save money if the full payout was taxable? Insurance companies always have huge charges & bad performance.
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Old 11.11.2016, 23:48
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Re: Will my UK endowment policy be taxed in Switzerland

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You probably did not know that many people use insurance policies to pay off their mortgage in CH
Thanks for your reply, I didn't know that it was used here. I was just surprised to find that everything has to be declared.

I played with the software and the premiums seems to reduce the tax payable on income; and putting in the surrender value seems to increase the tax on fortune, although not by much. And when I put in the pay-out, the tax doesn't change. So hopefully I can declare everything and the pay-out won't be taxed.
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Old 12.11.2016, 00:03
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Re: Will my UK endowment policy be taxed in Switzerland

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Thanks for your reply, I didn't know that it was used here. I was just surprised to find that everything has to be declared.

I played with the software and the premiums seems to reduce the tax payable on income; and putting in the surrender value seems to increase the tax on fortune, although not by much. And when I put in the pay-out, the tax doesn't change. So hopefully I can declare everything and the pay-out won't be taxed.
That sounds correct, you have to declare it so the Swiss can see where your money came from. You do realize that you can deduct 0.3% management costs, this is deducted from income & will exceed wealth tax liability on the first 5 million or so. There is actually a benefit of declaring assets! in a country where the Banks don't talk to the tax people & numbered accounts exist there needs to be a insentive to fill in your return in full.
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Old 12.11.2016, 02:27
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Re: Will my UK endowment policy be taxed in Switzerland

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That sounds correct, you have to declare it so the Swiss can see where your money came from.
OK, that makes sense.

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You do realize that you can deduct 0.3% management costs
I had no idea about that? Where do I deduct that? I saw that it is possible to deduct bank charges, but I didn't see anything about management costs. It could be useful for me to make this deduction.
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Old 12.11.2016, 10:13
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Re: Will my UK endowment policy be taxed in Switzerland

I had an endowment until this year, when it paid out. I just declared the value as it appeared on the statement. For this year, it'll be the money in my UK bank account. I didn't know about the management fee deductible - but it would only have been about 50 anyway.

My bank (First Direct) has not requested my tax number. They did ask me to fill in a form confirming my address, which had to be verified by one of a selection of witness. I used by Swiss bank (UBS), who were happy to do it for no charge.
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Old 12.11.2016, 10:26
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Re: Will my UK endowment policy be taxed in Switzerland

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OK, that makes sense.



I had no idea about that? Where do I deduct that? I saw that it is possible to deduct bank charges, but I didn't see anything about management costs. It could be useful for me to make this deduction.
It's item 16.3 on a Zurich tax return, it's in the deductions section 3 lines below insurance premiums deduction.
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