UK tax on Swiss pension withdrawal - Page 2

aSwissInTheUS · #21 25.03.2019, 16:20

	Quote:	Eastlands
	is the double taxation rule still inforce in 2019??

Yes. Still the same version as since December 19th 2012.
You might check status of the agreement and current text here:
https://www.admin.ch/opc/de/classifi...291/index.html

muze7 · #22 03.10.2019, 18:59

People are asking if the same rules still apply, I found via the Uk link that a new protocol is going to applied from Jan 1 2020!

The Swiss link someone gave still only shows the old law.

I have not yet understood the implications, but it starts like this:

	Quote:
	Protocol amending the 1977 UK/Switzerland Double Taxation Convention Signed on 30 November 2017 Entered into force on 16 July 2019 The provisions of the Protocol take effect:  For taxes withheld at source, 1 January 2020 In Switzerland:  For other taxes, 1 January 2020 In the UK:  For income tax and capital gains tax, 6 April 2020  For corporation tax, 1 April 2020

If someone has a good understanding of any implications of taking pillar 2 out to the UK now, please let us know

muze7 · #23 04.10.2019, 16:57

One interesting thing I did find out is this, having just spoken to LOB in Bern.
If you left Switzerland over a year ago, for the UK, LOB will wait four months before they will forward your letter to HMRC.

At the moment, the UK side will likely take at least several months to get back to them...

So a lot of patience required! (Say 7 months or more).

muze7 · #24 18.10.2019, 21:56

Interesting find with possible implications for withdrawing pillar 2 tax free?

It seems ESC A10 no longer applies and has been replaced. From the quote below, it seems things have changed again after the Finance act of 2017!

	Quote:
	Application of ESC A10 after 5 April 2011 It was announced on 31 March 2011 that ESC A10 would largely be withdrawn as new legislation at Part 7A ITEPA 2003 would provide a ‘just and reasonable’ reduction in the amount of employment income chargeable to income tax for duties performed outside the UK. This new ‘just and reasonable’ reduction would operate for ‘overseas service’, however ESC A10 was to continue to apply to: • payments of lump sum relevant benefits received directly from the employer; and • payments of lump sum relevant benefits out of rights which had accrued before 6 April 2011. To put this on a statutory footing, an Order was made on 4 February 2014 under section 160 Finance Act 2008. Article 5 of The Enactment of Extra-Statutory Concessions Order 2014 (SI 2014/211) inserted section 395B into ITEPA 2003 and this, together with the working of Part 7A ITEPA 2003, achieves the above limited continuation of the effect of ESC A10 where relevant benefits are provided in respect of ‘foreign service’. ESC A10 does not, therefore, apply to lump sum payments made on or after 5 February 2014. Foreign service relief on such payments is given by section 395B ITEPA 2003 - see EIM15325 for details. There are worked examples showing the operation of relief under both ESC A10 and section 395B at EIM15326. Note: For lump sum payments made from a non-UK based arrangement on or after 6 April 2017 this treatment will only apply where the recipient of the payment is non-UK resident throughout the tax year of receipt. If the recipient is UK resident, the payment may be a “relevant lump sum” taxable as pension income under Part 9 ITEPA 2003 rather than under the EFRBS provisions – see EIM74510 for more details

Does anyone understand whether a lump pillar 2 withdrawal would fall under Part 9 of Itepa or 395B ITEPA? OR to put simply, whether for people interested in doing this now (After 2017), this whole relying on the tax treaty still applies at all. Would they still be tax free?

(I am going to chase this with HMRC but previous posters have had a hard time getting to talk to right specialist).

I have posted here because not many people who will try this route will be non-UK resident for the entire year! So hopefully they can rely on part 9 Itepa 2003? Also, it is interesting that the law text only says non-resident. I assumed that would be relevant at the time of withdrawal. Yet the guidance says non-resident for the whole year!

PS. I am referring to build up before 2011.
edit: found a really good website explaining the 2017 changes: https://www.taxinnovations.com/overs...-changes-2017/
still not 100% sure what that means, still tax free except for any interest rate build up after 2017?

porsch1909 · #25 19.10.2019, 00:20

Just wondering if after bexit I can get the rest of my pillar 2 or will that be after the transition period is over

muze7 · #26 25.10.2019, 18:56

	Quote:	porsch1909
	Just wondering if after bexit I can get the rest of my pillar 2 or will that be after the transition period is over

No one knows yet. But depending on how aligned the UK want to be, I expect that the obligatory part will have to stay in Switzerland. Because if the UK strays too far from standard EU rules on pension treatment, UK citizens in Europe might lose many rights under a retaliation policy.

I think it will be too messy to change these rules too much. But it all depends on transition negotiations, if Brexit goes ahead

porsch1909 · #27 25.10.2019, 19:16

	Quote:	muze7
	No one knows yet. But depending on how aligned the UK want to be, I expect that the obligatory part will have to stay in Switzerland. Because if the UK strays too far from standard EU rules on pension treatment, UK citizens in Europe might lose many rights under a retaliation policy. I think it will be too messy to change these rules too much. But it all depends on transition negotiations, if Brexit goes ahead

Let's hope for a no deal brexit then

muze7 · #28 05.11.2019, 19:45

Just a heads up, I spoke to the people at BVG/CHAEIS recently - who get the funds of expats who leave who have not made arrangements for their own fund to hold pillar 2 contributions - who said a lot of people are suddenly withdrawing benefits from their freizugigkeistkonto.
I wonder if this is because any law changes are impending? Either Swiss laws or changes to the UK-CH protocol startnig on January 1st 2020? If so, are any of you aware what they are and how they affect withdrawals from pillar 2 or 3?

By the way, I asked for a quote from a tax professional, to clarify whether pillar 2 withdrawals still fall under the grandfathering rules in the UK (since the law was updated in April 2017). I was quoted 4000 pounds for a small pot and this was also the case if they concluded it no longer does qualify.

I was under the impression that for funds built up under Swiss (foreign service) prior to 2011 the situation is quite straightforward, but perhaps it is not

aSwissInTheUS · #29 05.11.2019, 20:36

	Quote:	muze7
	Either Swiss laws or changes to the UK-CH protocol startnig on January 1st 2020? If so, are any of you aware what they are and how they affect withdrawals from pillar 2 or 3?

If I understand it correctly some changes to UK-CH agreements were made to plug loop holes were a full tax avoidance was possible.
https://www.admin.ch/opc/de/federal-.../2018/5507.pdf

muze7 · #30 16.11.2019, 20:24

Just an update. I rang the UK tax office directly and spoke with a very knowledgeable technical specialist. He confirmed that for me, article 18 (or 19) of the treaty means that the pillar 2 lump sum is still NOT taxable in the UK. This info needs to be put into the 'other information' box on the self assessment form. So you do need to mention it and what you are applying the DTA to.

I did not need to apply anything like the successor of the ESC A10 provision (grandfathering rules). Although they would have worked for funds built up until 2011 as well. But the treaty itself is enough.

Disclaimer: I am not a tax advisor. If you need to check your situation, I recommend ringing them and/or taking professional advice.

pabcbc · #31 06.12.2019, 12:01

I have been looking at this and thank you very much to the posters who saved me a lot of time. To clarify in addition to what i read, DTT always prime over domestic law, so all the 2017 hardening of pension repatriation to the UK did not impact the CH UK provisions mentioned above for lump sums.

Kindly note that all of the above is my personal opinion that I may or may not apply to myself and is not advice of any kind to anybody.