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Old 24.01.2018, 11:55
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UK tax on Swiss pension withdrawal

Hi,

When leaving Switzerland a couple of years ago I did not manage to withdraw my pillar 2 because I previously made some voluntary contributions. I actually bought back a few years of Swiss Pensions to put more money in the pot and save tax on a bonus that was paid to me over there. The money was blocked for 3 years and now I have started counting the days until I can take the money back (well, everything but the compulsory part).
I am trying to figure out what the damage will be when HMRC ask for their cut. I have been reading contradicting information and would appreciate if someone could advise.
I spoke to HMRC this morning who transferred me to at least 3 specialists but none of them could answer properly. Their default attitude was "you are not 55 so it is income, you'll have to pay tax" which am afraid is a little bit more complicated than that. But they will look into it and should get back to me at some point.
My understanding was there was a tax-free treatment for payments of lump sums relating to foreign service. I have also just found the following

Switzerland: double taxation agreement, Article 18: Pensions
(2) 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.

Looks like tax is only due in Switzerland.
How did it work out for those of you who withdrew your Swiss pension?

Cheers
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Old 24.01.2018, 14:06
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Re: UK tax on Swiss pension withdrawal

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Hi,

When leaving Switzerland a couple of years ago I did not manage to withdraw my pillar 2 because I previously made some voluntary contributions. I actually bought back a few years of Swiss Pensions to put more money in the pot and save tax on a bonus that was paid to me over there. The money was blocked for 3 years and now I have started counting the days until I can take the money back (well, everything but the compulsory part).
I am trying to figure out what the damage will be when HMRC ask for their cut. I have been reading contradicting information and would appreciate if someone could advise.
I spoke to HMRC this morning who transferred me to at least 3 specialists but none of them could answer properly. Their default attitude was "you are not 55 so it is income, you'll have to pay tax" which am afraid is a little bit more complicated than that. But they will look into it and should get back to me at some point.
My understanding was there was a tax-free treatment for payments of lump sums relating to foreign service. I have also just found the following

Switzerland: double taxation agreement, Article 18: Pensions
(2) 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.

Looks like tax is only due in Switzerland.
How did it work out for those of you who withdrew your Swiss pension?

Cheers
There is extra statutory concession A10 that exempts anything before April 2011, slightly more complicated after that due to 'disguised remuneration' rules that need to be read but probably won't concern you.
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Old 24.01.2018, 14:41
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Re: UK tax on Swiss pension withdrawal

Thanks Fatmanfilms. HMRC have confirmed to me my understanding of the double taxation agreement is correct. So only Swiss tax will apply.
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Old 09.03.2018, 18:19
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Re: UK tax on Swiss pension withdrawal

Hi Cadbury
i am exactly in the same situation as yours, just recently moved back to the UK.

Could you please let me know who/how you contact HMRC to get a confirmation of the above?

Thanks
Andrea
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Old 09.03.2018, 18:49
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Re: UK tax on Swiss pension withdrawal

Hi,
I just called the phone number that is on my payslip... I am sure you can find on google a general phone number.
Do not assume it is going to be easy or they are going to give you the information you need. I had to speak to many agents and their default answer was "you need to pay". They even asked a specialist to call me back, that person came back with the same answer and I had to challenge them about the double taxation agreement. They eventually reverted to me saying I was right according to this
https://www.gov.uk/hmrc-internal-man...relief/dt18167
As long as tax is paid in Switzerland when you take the pension pot, nothing needs to be paid here, no need to notify HMRC.


HOWEVER while googling the link above I have just noticed the UK are currently renegociating the double taxation agreement with Switzerland.
https://www.gov.uk/government/upload...-Swiss-DTC.pdf


I have yet to read the doc, understand what it means and check if it's going to have any effect on pension withdrawals.
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Old 09.03.2018, 18:58
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Re: UK tax on Swiss pension withdrawal

I don't know what you want to do with your Swiss pension fund, but why not leave it? There is an agreement between the UK & Switzerland and the pension would be paid monthly in £ into a UK bank account. (I get my UK pension paid in CHF to my Swiss account.)

In another 20 years, there will likely be less than parity £ v CHF - maybe the value of the franc will outweigh other investment ideas??
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Old 09.03.2018, 20:28
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Re: UK tax on Swiss pension withdrawal

I am nowhere near pension age but in any case I think itís smarter to withdraw money when itís possible to do it with a low tax rate. I assume the tax rate is below 10% when withdrawing a swiss pension pot from a Compte de Libre Passage. When you get your Swiss pension it s taxed as income so at least 20%.
Iíd rather use the money as deposit on a house, put it in an ISA if it s less than 20k, or even a SIPP.
If you re so keen on CHF it s possible to invest in Swiss equities...
In French they say ďun tiens vaut mieux que deux tu l aurasĒ which litterally means 1 now is better than 2 later. I tend to agree. Laws change and the UK will only increase taxes in the future...
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Old 10.03.2018, 11:05
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Re: UK tax on Swiss pension withdrawal

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I don't know what you want to do with your Swiss pension fund, but why not leave it? There is an agreement between the UK & Switzerland and the pension would be paid monthly in £ into a UK bank account. (I get my UK pension paid in CHF to my Swiss account.)

In another 20 years, there will likely be less than parity £ v CHF - maybe the value of the franc will outweigh other investment ideas??
Swiss pension investments perform so badly, v my primary investment vehicle www.fundsmith.co.uk

I think you may be very surprised, the £ could easily be far stronger than it is today, the CHF is very overvalued this in all reality this won't continue for a further 20 years. Remember 17 years ago the CHF was very weak v USD / EURO / GBP, currencies go in & out of fashion.
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Old 18.01.2019, 09:27
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Re: UK tax on Swiss pension withdrawal

Hi There, I see this thread is a year or so old, does anyone have an update on whether UK tax is payable on Pillar 2 withdrawals? I am leaving this month for the UK and moving my Pillar 2 to a vested benefits account in Schwyz. Local Swiss tax will be deducted if I request a payout. I would then want to top up the pension with my new employer and put it an an ISA and perhaps funds if thereís any left after that. Since a direct transfer to my new employerís pension scheme is not an option, this is the only way I can move it there. I would expect that it should not be taxed the delta, and that I may even get tax paid back when moving it into my UK pension. Does anyone have recent experience of taking Pillar 2 non-mandatory pension pot to the UK? Many Thanks.
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Old 18.01.2019, 09:32
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Re: UK tax on Swiss pension withdrawal

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Hi There, I see this thread is a year or so old, does anyone have an update on whether UK tax is payable on Pillar 2 withdrawals? I am leaving this month for the UK and moving my Pillar 2 to a vested benefits account in Schwyz. Local Swiss tax will be deducted if I request a payout. I would then want to top up the pension with my new employer and put it an an ISA and perhaps funds if thereís any left after that. Since a direct transfer to my new employerís pension scheme is not an option, this is the only way I can move it there. I would expect that it should not be taxed the delta, and that I may even get tax paid back when moving it into my UK pension. Does anyone have recent experience of taking Pillar 2 non-mandatory pension pot to the UK? Many Thanks.
Why would anything have changed in less than a year, nothing was mentioned in last years budget.
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Old 18.01.2019, 10:38
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Re: UK tax on Swiss pension withdrawal

A year ago, neither of the returning posters had confirmation of whether or not they would need to pay any UK tax on Pillar 2 pension pot cashing after leaving CH. there was still uncertainty. A year later, they would know for certain.
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Old 18.01.2019, 14:10
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Re: UK tax on Swiss pension withdrawal

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A year ago, neither of the returning posters had confirmation of whether or not they would need to pay any UK tax on Pillar 2 pension pot cashing after leaving CH. there was still uncertainty. A year later, they would know for certain.
Only if they bothered to tell the revenue, UK tax is self assessment.
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Old 18.01.2019, 14:40
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Re: UK tax on Swiss pension withdrawal

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Hi There, I see this thread is a year or so old, does anyone have an update on whether UK tax is payable on Pillar 2 withdrawals? I am leaving this month for the UK and moving my Pillar 2 to a vested benefits account in Schwyz. Local Swiss tax will be deducted if I request a payout.
Swiss Tax at Source can be recouped if you live abroad at payout time.
See form Q-IS
https://www.estv.admin.ch/estv/de/ho...formulare.html

The UK HMRC will have to be informed. In case you are a non-dom resident you can only recoup the Swiss tax on the portion which you actually transferred to the UK.

Hope you did not use a to expensive pillar 2 provider just to save tax which you can get back anyway. (Unless you doge UK tax and do not report the payment to HMRC)
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Old 18.01.2019, 14:44
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Re: UK tax on Swiss pension withdrawal

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Swiss Tax at Source can be recouped if you live abroad at payout time.
See form Q-IS
https://www.estv.admin.ch/estv/de/ho...formulare.html

The UK HMRC will have to be informed. In case you are a non-dom resident you can only recoup the Swiss tax on the portion which you actually transferred to the UK.

Hope you did not use a to expensive pillar 2 provider just to save tax which you can get back anyway. (Unless you doge UK tax and do not report the payment to HMRC)
If you reclaim that tax then it's 100% taxable in the UK, so a very bad idea for a UK resident..
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Old 18.01.2019, 15:43
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Re: UK tax on Swiss pension withdrawal

Switzerland: double taxation agreement, Article 18: Pensions


(1) Subject to the provisions of paragraph (2) of Article 19, pensions and other similar remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.
(2) 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.


Pay the Swiss Tax and leave it at that.


PS: if you move your money to Liberty just to get a lower tax rate on the withdrawal keep in mind they will charge you a withdrawal fee which may end up offsetting the saving. It all depends on how much money you have in your pot.
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Old 20.01.2019, 09:04
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Re: UK tax on Swiss pension withdrawal

Thank-you Cadbury, FMF,

Itís clear to me now. I did the sums taking the withdrawal fee into account, and it made sense for me to move the funds from Basel Stadt. I will also fill out the LOB form as I have nothing to lose by doing so. I checked first that I have enough UK State Pension (National Insurance) contributions. If Iíd been short, I was going to make voluntary contributions first, then submit the LOB form. Itís a long shot, but letís see.
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Old 20.01.2019, 15:57
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Re: UK tax on Swiss pension withdrawal

I filled out the LOB form and got nothing
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Old 21.01.2019, 11:39
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Re: UK tax on Swiss pension withdrawal

Sorry, Oíve not Figured out how to reply to a specific message or thank people. But just to clarify, I donít intend to claim back the Swiss Tax. I intend to pay the Schwyz tax , then make maximum contributions into my UK employer pension scheme. The government pays tax back at 20% with max contributions (inc. employer contributions) of 100% of salary, per tax year, capped at £40k. For higher rate tax payers, the portion of tax over 20% can be claimed back via Self Assessment. https://www.gov.uk/tax-on-your-priva...ion-tax-relief
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Old 25.03.2019, 16:14
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Re: UK tax on Swiss pension withdrawal

is the double taxation rule still inforce in 2019?? if i take my lump sum pension pot back to the UK am i only taxed in Switzerland?
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Old 25.03.2019, 16:15
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Re: UK tax on Swiss pension withdrawal

err i should read everything first before i post
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