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Old 07.06.2010, 12:45
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Swiss Tax on UK pension lump sum

Hi, This is my first post and I have searched other threads to try to find this info so apologies if it is dealt with elsewhere.

I am Swiss resident with a C permit and looking forward to being able to draw on my UK pension fund (SIPP) within the next few years. I understand that pension drawdown will be taxed as income here in CH but can anyone tell me how the 25% lump sum that can be drawn tax free in the UK will be treated here for tax purposes? Is it tax free, taxed similarly to pillar 2 or 3 drawdown, or taxed as straight income in the year received?

Again my apologies if this is dealt with elsewhere.

Thanks

David
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Old 07.06.2010, 13:09
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Re: Swiss Tax on UK pension lump sum

You need to google and look into QROPS. This allows you to transfer your UK private pension tax free out of the UK, to a UK government approved scheme offshore or in Switzerland.

Beware of the QROPS salesmen who make fat commissions on these schemes. I suggest asking you UK bank for info...
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Old 07.06.2010, 14:53
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Re: Swiss Tax on UK pension lump sum

Thanks but a QROPS is not what I have in mind. I have looked through those threads. Its just the straightforward question of Swiss tax treatment of the 25% lump sum that can be taken tax free in the UK when starting to draw from my personal pension there.

I would hate to do this and then find that the Swiss tax it!
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Old 07.06.2010, 21:32
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Re: Swiss Tax on UK pension lump sum

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Thanks but a QROPS is not what I have in mind. I have looked through those threads. Its just the straightforward question of Swiss tax treatment of the 25% lump sum that can be taken tax free in the UK when starting to draw from my personal pension there.

I would hate to do this and then find that the Swiss tax it!
I have no direct experience of this. My guess is that the Swiss will tax it but at the special rates applicable for liquidation Swiss pension or 3a capital.

You should ask the Swiss tax office in your jurisdiction. In ZH, you can get a quick and binding reply to such questions.
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Old 08.06.2010, 00:08
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Re: Swiss Tax on UK pension lump sum

You may be asked for back wealth tax if it has not been previously declared...
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Old 08.06.2010, 00:51
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Re: Swiss Tax on UK pension lump sum

Actually a QROPS is irrelevant to this question anyway, since you can take 25% lump from a QROPS or without it. You do not have to declare an uncrystallised pension as part of your wealth for Swiss wealth tax since it's in fact not your asset.

Last edited by economisto; 08.06.2010 at 09:35.
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Old 08.06.2010, 09:23
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Re: Swiss Tax on UK pension lump sum

I believe Article 18 of the bilateral Swiss-UK double taxation treaty covers this:

"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. "

Not sure if this would be updated/amended with all the other tax accords the Swiss are now in the process of updating due to the recent pressure on the Swiss re. UBS and others.
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Old 09.06.2010, 07:33
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Re: Swiss Tax on UK pension lump sum

Thank you running deer that is most helpful.
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