Tax Optimisation of pension schemes in Switzerland

For almost all private individuals it is important to reduce one’s taxes regardless of residence. This is true both in the work situation and as a pension beneficiary. In Switzerland, a frequently used method to reduce the tax voluntarily is to make a down payment in a company pension in Switzerland and at the same time benefit from an additional tax deduction.

Double taxation agreement with Switzerland
The latest double taxation agreement in Switzerland unfortunately makes tax deduction payments to a company pension unfavourable. Especially the situation where you move to another country after a working life in order to enjoy the benefits from the pay-out from the Swiss company pension, you risk losing money. This is because the pay-out is often taxed by withholding tax at the source in Switzerland and income tax in the new country, however deducted for tax paid in Switzerland. Taxation levels are in this way suited the new country’s tax, which is usually higher than in Switzerland.

Tax-free gains in Switzerland
A much better solution is to make a payment at a non-deductible policy with an insurance company in Switzerland. As long as you live in Switzerland all gains (interest rates, dividends, capital gains, etc.) earned during the insurance term are tax-free. This is because of a tax- and insurance-privilege which incidentally cannot be achieved in the banks.

This means that you only have to pay tax on interest rates income and other income earned after relocating back to one’s home county, and thus not of payments from this scheme.

To learn more about these benefits, how to optimise tax on pensions in Switzerland, please feel free to contact