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Old 11.11.2010, 14:59
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Reducing tax on pension taken as a lump sum

Hi,

I will be leaving Switzerland for a non-European country and will elect to withdraw my accumulated second-pillar pension assets as a lump sum. I am resident in Basel Stadt, so would normally be subject to taxation.

However, I heard that PensFree (http://www.pens-expert.ch/en/free/moving-abroad/) offers a service where I can elect to have the pension assets transferred to their fund, which is domiciled in Schwyz. Thereafter, I would request that PensFree transfer these assets to my personal bank account, at which point the Schwyz tax would be levied. Since Schwyz has a lower tax rate, I would be able to reduce my tax liability.

The question is whether this is approved by the Swiss tax authorities and also if Pensfree is a reputable institution. After all, we are talking about a significant amount of money that I will be entrusting to them, albeit for a short period of time. I'd be particularly interested to hear of others' experience with Pensfree.

Appreciate any insight into this matter.
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Old 11.11.2010, 15:02
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Re: Reducing tax on pension taken as a lump sum

I'm not sure it works that way. Try talking to the people where you have your pension. They told me that you leave Switzland and they send you the money after 90 days if you meet the criteria, I'm not sure that it matters where you lived in Switzerland, just on where you are moving to.
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Old 11.11.2010, 15:09
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Re: Reducing tax on pension taken as a lump sum

I believe you will be subject to a low fixedish federal rate on the distribution. I dont think it matters what canton you lived in.
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Old 11.11.2010, 15:09
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Re: Reducing tax on pension taken as a lump sum

I think there are two issues. The first is the destination: if it's outside Europe, then you have the option to access your pension assets before retirement age.

If one elects to do this, then there is the question of how much tax applies to the withdrawal. I checked this with Pensfree and they say that it's the domicile of the fund that matters, which is why there would be a tax saving if I first transfer the assets to Pensfree and then have the money sent to my personal bank account.
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Old 11.11.2010, 15:26
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Re: Reducing tax on pension taken as a lump sum

I can confirm that this very thing was discussed last night at a meeting of the American Swiss Chamber of Commerce regarding US/UK/Swiss pension issues. It is the domicile of where the funds are first deposited. Doing so in canton Schwyz has significant tax witholding advantages. By the way, I believe that if you are moving on to an even lower tax country, you could declare the distribution in the new country and upon proving such tax declaration in your new country of residence claim back the tax witheld in Switzerland.


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I think there are two issues. The first is the destination: if it's outside Europe, then you have the option to access your pension assets before retirement age.

If one elects to do this, then there is the question of how much tax applies to the withdrawal. I checked this with Pensfree and they say that it's the domicile of the fund that matters, which is why there would be a tax saving if I first transfer the assets to Pensfree and then have the money sent to my personal bank account.
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Old 11.11.2010, 15:31
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Re: Reducing tax on pension taken as a lump sum

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I believe you will be subject to a low fixedish federal rate on the distribution. I dont think it matters what canton you lived in.
Not quite the same, but. Advised by UBS when I was living in Zug that should I use my pension to pay for a house I would pay considerably less in tax than my new destination Vaud.

So it does matter where you are resident, ie. what canton you live in.
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Old 12.11.2010, 12:41
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Re: Reducing tax on pension taken as a lump sum

Thanks for the information. Could you suggest anyone at the Chamber of Commerce I can contact on this subject?

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I can confirm that this very thing was discussed last night at a meeting of the American Swiss Chamber of Commerce regarding US/UK/Swiss pension issues. It is the domicile of where the funds are first deposited. Doing so in canton Schwyz has significant tax witholding advantages. By the way, I believe that if you are moving on to an even lower tax country, you could declare the distribution in the new country and upon proving such tax declaration in your new country of residence claim back the tax witheld in Switzerland.
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Old 12.11.2010, 13:46
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Re: Reducing tax on pension taken as a lump sum

Get advice from a professional tax advisor/pension expert (!)

I don't know how long you have been contributing, but I wouldn't rely solely on a forum or AmCham, since the amounts can be quite substantial. (The statements made in this thread already contradict what is mentioned on the pensfree website)

If your new country also taxes your pension payments and CH does not give you a refund of the Swiss tax, the tax bill will hurt you.
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Old 12.11.2010, 14:29
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Re: Reducing tax on pension taken as a lump sum

Fair point. I did run this by my accountant who verified the claim of a reduced tax liability. He also checked the registration details of the Pensfree fund and it appears to be kosher. I would just like to hear from any actual experiences with Pensfree as a final confirmation.

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Get advice from a professional tax advisor/pension expert (!)

I don't know how long you have been contributing, but I wouldn't rely solely on a forum or AmCham, since the amounts can be quite substantial. (The statements made in this thread already contradict what is mentioned on the pensfree website)

If your new country also taxes your pension payments and CH does not give you a refund of the Swiss tax, the tax bill will hurt you.
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Old 14.02.2011, 15:27
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Re: Reducing tax on pension taken as a lump sum

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Hi,

I will be leaving Switzerland for a non-European country and will elect to withdraw my accumulated second-pillar pension assets as a lump sum. I am resident in Basel Stadt, so would normally be subject to taxation.

However, I heard that PensFree (http://www.pens-expert.ch/en/free/moving-abroad/) offers a service where I can elect to have the pension assets transferred to their fund, which is domiciled in Schwyz. Thereafter, I would request that PensFree transfer these assets to my personal bank account, at which point the Schwyz tax would be levied. Since Schwyz has a lower tax rate, I would be able to reduce my tax liability.

The question is whether this is approved by the Swiss tax authorities and also if Pensfree is a reputable institution. After all, we are talking about a significant amount of money that I will be entrusting to them, albeit for a short period of time. I'd be particularly interested to hear of others' experience with Pensfree.

Appreciate any insight into this matter.
I am going through the exact same thing and can confirm I've received similar tax advice. Have you found out anything about PensFree? I would also be entrusting them to significant funds so am very interested if you used them.
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Old 01.06.2016, 14:19
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Re: Reducing tax on pension taken as a lump sum

I am in the same situation and was wondering if anybody had experience (good or bad) with PensFree since this last post.
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