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Old 25.06.2021, 14:48
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How much perecentage of refund to expect on pillar 2 and pillar 1?

Hi Guys,


I would be leaving Switzerland soon and moving to UAE and wanted to check how much percentage of refund can I expect both from my Pillar 2 and Pillar 1.
I am an Indian passport holder.


Total contribution in pillar 2 (me and my employee contribution): 50K
Total contribution in pillar 1(my contribution) : 17K


I wanted to know what percentage of the above money would I get back as it would help me plan my finances better?


I have read in some of the threads that if I move my pillar 2 funds to a lower paying canton first like Zug or Schwyz I can save some money on taxes, I have reached out to a tax advisor regarding the same, I would like to understand from the folks who have already done this whether there is any savings or not?


Thanks,
Stephaine
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Old 25.06.2021, 18:17
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

For your Pillar 1:

https://www.ch.ch/en/refund-ahv-contributions/

For pillar 2 you will first have to move your money to a Vested Benefit Accounts Institution. Whether you will save taxes will also depend on whether the money is taxable where you are going and how much the tax rate is.

Withholding tax for an institution based in the Canton of Schwyz will be the lowest. I can recommend the Schwyzer Kantonalbank. Once you leave you will need to apply to have the money paid out. You will get all of the money minus the withholding tax. If you are not taxable in your destination country that is all the tax you will pay. If you are taxed in your country of destination, you can apply for all or some of the tax you paid in Switzerland to be refunded.
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Old 25.06.2021, 19:01
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

If your employment end date is already established, and you're leaving Switzerland permanently, you can ask the pension fund administrator for a projected value of your 2nd pillar accrued savings, and to calculate the withholding tax that will apply if you drawdown the capital on your departure.

If there's no social security agreement between CH and UAE, you should be able to draw down 100% of the accrued pension savings.

You can also arrange to transfer your pension savings into a blocked account in Switzerland; some financial institutions establish these in lower tax cantons (such as Schwyz).

However, they might require you to leave your pension savings with them for a number of years, and depending on where you are (after UAE) when you do drawdown your savings, you may need to pay tax on them in that country.
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Old 25.06.2021, 19:18
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

Thanks for the insights guys,


There is not social security agreement between CH and UAE.


I found this capital withdrawal tax website - https://finpension.ch/en/capital-wit...-tax-compared/
I am not really sure if it would be income tax or capital withdrawal tax?


My understanding was even if I leave the pension into some vested benefit account for some years, when I wish to withdraw it after some years, I still need to pay swiss taxes since the money I have earned was on Switzerland but I might be incorrect there? income tax is free in UAE so not sure if taxation in the destination country would be allowed by Swiss Authority.
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Old 26.06.2021, 06:00
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

No, if you have left the country, you would not pay income tax on it, only the withholding tax.
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Old 26.06.2021, 15:32
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

Just calculate the real tax saving of Schwyz. Looked into this year's ago and the Schwyz Kantonal Bank charges you opening and closing fees which may or not render the saving immaterial and probably ask that you go in person to open the account.

If you choose for a different institutions just beware that it's not the place where you open the account that counts for tax purposes, rather the legal domicile of the bank. For example Migros Bank would be Basel etc.
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Old 26.06.2021, 16:46
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

My circumstances are different but FYI, I moved my Pillar 2 and 3A to VIAC who are based in Basel. If I remember rightly they said that in my case I'd pay 2.5% tax on withdrawal when reaching retirement age but that I could switch it to an account in Schwyz before I leave and pay no tax. However the previous poster made a good point -- the need to calculate whether it's worth it once fees etc are included. In my case it will be the tax is currently about 7K CHF which will pay for a big chunk of my removal costs back to the UK.
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Old 26.06.2021, 17:29
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

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Just calculate the real tax saving of Schwyz. Looked into this year's ago and the Schwyz Kantonal Bank charges you opening and closing fees which may or not render the saving immaterial and probably ask that you go in person to open the account.

If you choose for a different institutions just beware that it's not the place where you open the account that counts for tax purposes, rather the legal domicile of the bank. For example Migros Bank would be Basel etc.
Actually a Freizügigkeitskonto at the Schwyzer Kantonalbank is free to open and free to close. They charge CHF 800 to transfer ALL your funds abroad. That's it... And when I opened my account there I didn't have to go in person, although that may have been Covid-related. However, now they have been doing it for so long, maybe they will continue to open accounts without physical presences.

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Old 09.07.2021, 00:32
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Re: How much perecentage of refund to expect on pillar 2 and pillar 1?

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Total contribution in pillar 1(my contribution) : 17K
Your employer contributes same amount so 34K total. Only ~80% goes into pension and that's the most you can be refunded.

Another limiting factor is net present value of your future pension, refer to https://sozialversicherungen.admin.ch/de/d/6130 for elaborate treatise on how exactly this swindling technique works. But to a first degree of approximation it's ceil(2390*years_of_contribution/44)*12 *B20(current_age), where B20 (or B21) is tabulated in appendix there should you get bored reading all that scam math they pulled out of their ass to justify it

Then subtract approx 10% withholding tax - charged at GE canton rates wher AHV office is domiciled. No option to transfer it to middle of nowhere in schwyz and have them wire you afterwards to save some tax like with pillar 2 sorry. Also watch out how your new country of residency is going to treat the payment, some treat it like bona fide income and tax as such; likewise with pillar 2 & 3.

Whether you can or cannot get refund also depends on your nationality at the time of request. I don't have a pointer to the list right now tho, sry
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