Taxes and withdrawal of the 2nd pillar when leaving Switzerland

Introduction

Are you thinking of leaving Switzerland soon? Do you wonder what the taxation fate of your LPP will be? How much taxes you will have to pay in order to enjoy your well-diserved savings? 

Wait a minute, are you thinking of going to France? In this case, see you here! Otherwise, you are in the right place! You thought you were staying in Switzerland? Then head here. If it’s neither France nor Switzerland, then you’re in the right place

If I move abroad, can I withdraw my entire LPP?  

This is probably one of the most important questions to ask yourself when you’re considering leaving Switzerland: How much can you withdraw? Everything, or only part of it?
Both answers are possible — it depends entirely on your situation.

In which cases can I withdraw my entire LPP pension capital?

For your pension fund or vested benefits foundation to allow a full withdrawal of your LPP assets, two situations apply:

• You are at least 60 years old:
  At this point, whether you leave Switzerland or not doesn’t make any difference. As soon as you no longer have an employer, your pension assets belong to you. You can then withdraw them (fully or partially) as a lump sum, depending on the applicable rules.
• You are moving to a country outside the EU/EFTA:
  If you move to France, Spain, Portugal, or any other EU/EFTA country before the age of 60, you can only withdraw the extra-mandatory part of your 2nd pillar. To keep things simple:
  • The mandatory part is what is required by law (LPP).
  • The extra-mandatory part is everything your employer contributes beyond the legal minimum.
  And only this extra-mandatory portion can be withdrawn if you leave Switzerland for an EU country before age 60.
  But how can you know what is mandatory and what is extra-mandatory in your case?
  You simply need to check your LPP pension certificate (if you are still affiliated with a pension fund) or your vested benefits account statement (if you’ve already left your employer). These documents clearly indicate the breakdown.
• Buying a primary residence:
  The law is clear: you are allowed to withdraw your 2nd pillar to finance a primary residence, whether the property is in Switzerland or abroad. There is no fixed limit to the withdrawal amount — as long as the purchase price is higher than your LPP assets, you can in principle withdraw everything.
  The only restriction applies to people over 50:
  • You may withdraw the amount available at age 50,
  • or half of your assets at the time of withdrawal,
  • whichever is higher.

This rule aims to protect your future retirement while still allowing access to home ownership.

In which cases can I withdraw only part of my capital when leaving Switzerland?

As mentioned earlier, if you do not meet one of the three previous conditions, only the extra-mandatory part of your 2nd pillar can be paid out when you leave.

This is typically the case if you are moving to a European country, are under 60 years old, and do not intend to buy a primary residence abroad.

How are LPP capitals taxed?  

Unlike pensions, the capital from retirement savings is always taxed at source in Switzerland. In other words, you won’t have a chance to receive the full amount of the capital you were expecting. A portion will be paid to you, and the other will be directly transferred to the tax authorities. This capital will then need to be declared in your new country of residence. Does this mean your capital will be taxed twice, or double-taxed?

No.

In fact, in the vast majority of cases, you will not be double-taxed. Just like with all international tax matters, the double taxation agreements between Switzerland and your country will determine which country has the right to tax this capital.

It is a three-stages process. 

First step: Taxation at source in Switzerland

Switzerland asks you to pay taxes on your second pillar newly withdrawn. The amount will be taxed at source. How much does it amount to? It is calculated on the basis of the tax scale of the head office of the institution where your money is deposited. In short, it is not your place of residence that is decisive (as is the case for Swiss residents), but the place where your vested benefits are stored.

Second step: Declare your withdrawal to your new country of residence

Your second pillar assets are freed and transferred to your bank account. You must declare them at the taxation authority of your country of residence. If a tax is required, you must pay it. 

Third step: Final tax

This third and final step depends on the result of the second one. Either your new country has the right to tax the capital, in which case you must pay your taxes there and then request a refund from Switzerland for the tax it would have deducted at the source. Or, in the second case, Switzerland remains responsible for taxing the withdrawal, and the tax that was initially withheld will become final.

Simply keep in mind that in the event of capital withdrawal, you will not be able to rely on the amount of your capital withheld by Switzerland. 

Is it possible to optimize the taxes on the withdrawal of the 2nd pillar when moving abroad?

As we approach 2026, we decided to add this section because it’s a crucial question (I agree with you) that constantly comes up. Good news: in certain specific cases, it is indeed possible to optimize the taxes on your 2nd pillar withdrawal. But, as usual, it depends on your situation. Let’s explore this in detail:

Option 1: The new country has the right to tax your withdrawal

In this first scenario, two strategies are available to optimize the net amount of your withdrawal:

• Choose a country with favorable taxation:This might seem obvious, but it is often an overlooked option. Some countries, like Spain, can impose heavy taxes. The first solution is to avoid withdrawing your capital in these countries and to choose a more favorable timing: either wait to withdraw it in Switzerland or, perhaps, take a “small detour” through a country with more lenient tax policies.
• Understand the tax system of your destination country:At FBKConseils, we don’t claim to know the perfect tax treatment of 2nd pillar withdrawals in all countries around the world. However, it’s certain that if you understand the basics of your new country’s tax system, opportunities for optimization will quickly become apparent. For example:
  • Does a staggered withdrawal change the amount of tax?
  • Are there regions or municipalities that offer more favorable tax rates?
  • Does my age influence the amount of tax?
  • Does the reason for withdrawal (buying a residence, retiring, etc.) affect the tax?
  The more you understand how your new tax system works, the more likely you are to spot optimization opportunities.

Option 2: Switzerland has the right to tax your withdrawal

Just like in the previous case, two interesting strategies present themselves:

• Split your capital to reduce taxes:The larger the amount withdrawn, the higher the tax rate. The conclusion? If you can divide your capital before your departure (even into multiple parts), you can make several withdrawals, each subject to a lower tax rate. The total amount withdrawn will be the same, but you will benefit from a more favorable tax rate.
• Transfer your capital to a more favorable canton:Although this was briefly mentioned earlier in the article, it’s important to note that in Switzerland, when the reason for withdrawal is leaving the country, it means that you are no longer a resident in a canton or municipality. As a result, the canton of origin of your assets becomes key in calculating the tax. It would be wise to transfer your funds to a canton with more favorable taxes before making the withdrawal. Of course, this type of maneuver can be complex and costly, so before considering this option, make sure that the savings made justify the effort.

A departure needs preparation – and why with FBKConseils?

Especially when it comes to withdrawing your savings, the fruit of your many years of work. It’s best to call on a professional to guide you through this process.

A first appointment with no fees

At FBKConseils, we are available for an initial consultation, free of charge, to answer all your questions. The goal is to help you approach this process with peace of mind, without any lingering questions before you begin the steps.

Administrative procedures

We take care of all the administrative steps. You simply hand us your file, and we’ll handle all interactions with the relevant parties, ensuring that every step is completed correctly, all the way to the final deposit of your capital into your bank account.