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Old 19.01.2021, 13:19
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3d Pillar on B permit

Hello

I have some questions about 3rd pillar.. I have never looked into this before, because I have always thought it was only for Swiss citizens/C permit holders but now I have learnt it can be done by B permit holders too.

Is it really true that you can deduct it from taxes even if on a B permit?
Is it better to have it with bank or insurance?
Is it convenient?

Thank you very much!!
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Old 19.01.2021, 13:30
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Re: 3d Pillar on B permit

Hi,

Is it really true that you can deduct it from taxes even if on a B permit?
- yes you can do it, there is a simplified form for this
Is it better to have it with bank or insurance?
- there almost no interest on 3rd pillar - your only advantage is tax saving, so in my opinion it doesn't matter where you hold your 3rd pillar
Is it convenient?
- you can save on taxes, but you block your money (however you can use it to buy a house for example) - it depends on your personal situation
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Old 19.01.2021, 13:44
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Re: 3d Pillar on B permit

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Hi,

Is it really true that you can deduct it from taxes even if on a B permit?
- yes you can do it, there is a simplified form for this
Is it better to have it with bank or insurance?
- there almost no interest on 3rd pillar - your only advantage is tax saving, so in my opinion it doesn't matter where you hold your 3rd pillar
Is it convenient?
- you can save on taxes, but you block your money (however you can use it to buy a house for example) - it depends on your personal situation
Absolutely, a B permit holder can contribute to his 3rd pillar.

But I disagree with your comments on the form and the interest of the 3rd pillar. With VIAC or Finpension, a long term investment is likely to provide an advantage well beyond the tax savings.

To the parent poster, please consider 3rd pillar solutions other than banks (okay) or insurance (bad).
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Old 19.01.2021, 14:13
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Re: 3d Pillar on B permit

You already have most likely some kind of 3rd pillar.
The third pillar consists: 3a which is the tax preferred part, and 3b which is all of your other savings you have: cash in the mattress, money in a bank account, funds, shares, gold, etc.

Less important than the provider of a 3a product, is what it actually is. Most common options are:
- saving account
- life insurance
- saving plans/funds with a contract
- independent stock market investments
- a mix of the above

You have to be aware about two important restrictions: the one set by the law which is for all products the same and the restriction set by the product provider. Regarding the latter, saving accounts and independent stock market investments are the most flexibles. On the other hand life insurances and saving funds with contract are the most restrictive and the vehicle where there is a high chance you might lose a lot of money in management fees specially if you want to get out early (as allowed by the law).

Starting with these year there is a major change in tax at source reassessment (See 2021 Changes in tax at source reassessment [Kreisschreiben 45] ) In the past you could do a simplified tax return when you had paid into pillar 3a. Now, you must do a full return and, as far as I understand, you will be regularly taxed. Depending on your actual situation this might not be as favorable as you might think.
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Old 20.01.2021, 10:43
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Re: 3d Pillar on B permit

Whats really good by starting the 3rd pillar when you are on a B permit. You actually see what tax you get back.

On a C it is deducted from your total, so you never really see what you got back. On a B you are taxed at source. You complete a simple 1 or 2 page tax form which basically has your name, bank details, and the amount you paid into the 3rd pillar, then about 9 months later the tax office send you a cheque (not exactly, but they will credit your bank).

If you have spare cash its convenient and easy.

Where to put it?? Well there are loads of threads on that to have a read through. Depending what age you are to start and how much you can put in, will determin if you need to split it. Had you asked this in Decmber Id have said get it in a bank asap so you make the 2020 tax year, then shop around. As you are asking in January, you have loads of time to look and get advice on whats best.

I think a fund is not a bad option. VIAC is a good starting point. If you go for a bank, I also in the past had good experience with CIC.
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Old 20.01.2021, 12:22
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Re: 3d Pillar on B permit

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Whats really good by starting the 3rd pillar when you are on a B permit. You actually see what tax you get back.
You made me think of another possible advantage. When I arrived in CH with an open contract, they put me on an L permit (presumably because I'm not EU/EFTA). That didn't stop me from contributing to my 3rd pillar and buying back more modest amounts in my 2nd pillar. Five years later, I used that as an argument to receive an anticipated C permit. Did that argument help or not? Difficult to say, but I received the C permit.
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Old 20.01.2021, 12:23
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Re: 3d Pillar on B permit

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On a B you are taxed at source. You complete a simple 1 or 2 page tax form which basically has your name, bank details, and the amount you paid into the 3rd pillar, then about 9 months later the tax office send you a cheque (not exactly, but they will credit your bank).
As said above, this is a thing of the past.
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Old 20.01.2021, 12:38
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Re: 3d Pillar on B permit

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You made me think of another possible advantage. When I arrived in CH with an open contract, they put me on an L permit (presumably because I'm not EU/EFTA). That didn't stop me from contributing to my 3rd pillar and buying back more modest amounts in my 2nd pillar. Five years later, I used that as an argument to receive an anticipated C permit. Did that argument help or not? Difficult to say, but I received the C permit.
Why would buying into pillar 2 and pillar 3a help you get a C permit? Im sure I see the logic.
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Old 20.01.2021, 13:46
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Re: 3d Pillar on B permit

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Why would buying into pillar 2 and pillar 3a help you get a C permit? Im sure I see the logic.
Intention to install oneself in Switzerland despite the officially temporary L permit.
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Old 20.01.2021, 13:49
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Re: 3d Pillar on B permit

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Intention to install oneself in Switzerland despite the officially temporary L permit.
I would only invest in the 2nd pillar if I knew I'd be leaving relatively soon!

I guess it does show intent to understand the Swiss System.
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Old 20.01.2021, 15:12
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Re: 3d Pillar on B permit

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I would only invest in the 2nd pillar if I knew I'd be leaving relatively soon!
If leaving, it depends on your destination country, right?
In any event, I just view the 2nd pillar as the 1% risk free part of my portfolio.
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Old 20.01.2021, 21:21
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Re: 3d Pillar on B permit

ATTENTION!
According my UBS internetbank notification (that's where I have a 3rd pillar account), it won't be possible anymore to get a refund on pillar 3a payments via a simplified tax form anymore (starting from 2021). Whoever wishes to deduct need to fill a complete declaration. Couldn't find the official source yet, pls link it if you happen to find it.
I'm still hesitant if I should make payments as I might end-up paying more with full declaration :/
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Old 20.01.2021, 22:50
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Re: 3d Pillar on B permit

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ATTENTION!
According my UBS internetbank notification (that's where I have a 3rd pillar account), it won't be possible anymore to get a refund on pillar 3a payments via a simplified tax form anymore (starting from 2021). Whoever wishes to deduct need to fill a complete declaration. Couldn't find the official source yet, pls link it if you happen to find it.
I'm still hesitant if I should make payments as I might end-up paying more with full declaration :/
If you live in Zurich city I would think that's a serious possibility, especially if you are a relatively high earner (100-120k) and if you are married and both of you work

Last edited by HickvonFrick; 21.01.2021 at 01:06.
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Old 20.01.2021, 22:58
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Re: 3d Pillar on B permit

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I would only invest in the 2nd pillar if I knew I'd be leaving relatively soon!
You mean investing by buying in more than the monthly rate? Why only if leaving soon?
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Old 21.01.2021, 00:12
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Re: 3d Pillar on B permit

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If you live in Zurich city I would think that's a serious possibility, especially if you are a relatively high earner (100-120k) and/of you are married and both of you work
How can this happen? I'd like to know because both my boyfriend and I currently live in ZH, we both work and we are on the high earning side.
We were considering marriage next year(if it doesn't increase too too much the tax rate) and we were considering putting money in the 3rd pillar, if it is convenient..
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Old 21.01.2021, 00:52
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Re: 3d Pillar on B permit

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You mean investing by buying in more than the monthly rate? Why only if leaving soon?
Because the returns are very poor. It's better just to pay the tax and enjoy superior investment performance in the medium to long term.

In the very Long term you could apply the same logic to pillar 3a.
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Old 21.01.2021, 01:04
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Re: 3d Pillar on B permit

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How can this happen? I'd like to know because both my boyfriend and I currently live in ZH, we both work and we are on the high earning side.
We were considering marriage next year(if it doesn't increase too too much the tax rate) and we were considering putting money in the 3rd pillar, if it is convenient..
If you earn over 120k (if you get married- either of the couple) 3a would reduce your tax burden as you have to file a tax return anyway and it'd reduce your taxable income.

If you (both if married) earn just under 120k it'd likely increase your taxable burden because your withholding tax is based on a cantonal average. If you contribute to a pillar 3a and then file a tax return tax will be calculated at Zurich city rates - which are much higher than the cantonal average. This would likely be particularly disadvantageous if you got married and you both were close to the 120k threshold.
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Old 21.01.2021, 01:14
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Re: 3d Pillar on B permit

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Because the returns are very poor. It's better just to pay the tax and enjoy superior investment performance in the medium to long term.

In the very Long term you could apply the same logic to pillar 3a.
I get that. What I am not getting is why you would invest just before leaving the country.
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Old 21.01.2021, 01:55
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Re: 3d Pillar on B permit

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I get that. What I am not getting is why you would invest just before leaving the country.
Well it depends on where you are going. For many places you can withdraw pillar 2 in full when you leave Switzerland and realise (most of) the tax saving. Even in the EU Iirc you can withdraw if you don't work after moving.
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Old 21.01.2021, 03:15
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Re: 3d Pillar on B permit

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How can this happen?
I don't have much to deduct (especially no huge dept on a house or so) but also have some - minor - wealth/income abroad (irrelevant for Quellensteuer, not so much for full declaration).
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