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Old 27.02.2007, 14:35
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Tax break on contribution to pillar 3a retirement pension

Hi

I am soon moving to Switzerland (Basel). and I am getting curious about the taxation thing.

I am initially going to be in Basel only to the end of 2007. So 10.5 months in total.

I am married and have 1 child.

I am an IT contractor employed via an umbrella company.

I used the https://calculators.credit-suisse.com/p/d/calc calculator to calculate a total tax/social cost burden of around 29%.

I then tried to include a 50.000CHF payment to 3a pillar pension scheme.
the calculator said I would save 18.785 CHF by contributing.

I then calculated what tax I would have to pay when I take out the 50.000CHF at the age of 34.
It calculated that I would have to pay 1.830 CHF in taxes when taking out the pension savings.

This wuold give me a net tax saving of about 17.000 CHF that I would have extra when leaving Basel at the end of the year.

Does this sound right to you experts?
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Old 27.02.2007, 14:58
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Re: Tax break on contribution to pillar 3a retirement pension

I am a bit cleverer now and I believe the pension contribution is to pillar 2.
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Old 27.02.2007, 15:10
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Re: Tax break on contribution to pillar 3a retirement pension

yep, 2nd, because i believe the limit on 3 seule is approx 6600 chf per year
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Old 27.02.2007, 15:15
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Re: Tax break on contribution to pillar 3a retirement pension

Ok.

But is that big tax break available if I put the money in during the year and then take them out as I leave?
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Old 27.02.2007, 18:58
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Re: Tax break on contribution to pillar 3a retirement pension

Dear Thomas

Nice try! But since start of 2006, new rules mean that you can only buy an extra 20% of your insured salary per year, if you have never had a swiss pension before (which I'm assuming). Also the new rules mean that when you leave you cannot withdraw it, if you go to another EU country it needs to go into an approved pension scheme there (there are threads on here that explain that). If you go elsewhere you might have some leeway to manoevre.

Andy
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Old 27.02.2007, 22:18
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Re: Tax break on contribution to pillar 3a retirement pension

Quote:
yep, 2nd, because i believe the limit on 3 seule is approx 6600 chf per year
6350 at the moment.

But... personally, unless you're paying really high taxes every year and you plan on staying here for over 10 years, I don't think it's worth it.

With a "3rd pillar" when you take out a 3a, you can deduct the amount from your taxes each year but when you withdraw everything at the end, you pay tax on it.

With a 3b, you can't deduct it each year. However, after 10 years, it is tax free.

The amount you save each year with a 3a is just not worth it when you look at how much you wouldn't pay with a 3b.

3b's tend to have a much higher rate of interest too

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Old 07.10.2007, 14:00
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Re: Tax break on contribution to pillar 3a retirement pension

Hi

It seems from your answer that additional money paid into the Swiss pension scheme to reduce the amount of tax paid wouldn’t be attractive if one goes out of Switzerland and works in another EU country.

I am bit concerned by your answer, as if I go back to work again in France – all my pension money (including the additional ones I paid) is transferred to French pension coffers and that would be the worst that could happen for me …

Could you give me the links where I could get more information on this subject.

Thanks in advance

Ashish




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Dear Thomas

Nice try! But since start of 2006, new rules mean that you can only buy an extra 20% of your insured salary per year, if you have never had a swiss pension before (which I'm assuming). Also the new rules mean that when you leave you cannot withdraw it, if you go to another EU country it needs to go into an approved pension scheme there (there are threads on here that explain that). If you go elsewhere you might have some leeway to manoevre.

Andy
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