What will you pay in taxes when you take out your second pillar?
When you take out capital from our second pillar, communal, cantonal and federal taxes are perceived. It is an income tax based on the same scales and on the same calculation method but that will be reduced to almost 1/5 of the standard rate in the end.
Knowing this, if is rather impressive to see how the amount can vary from one region to the other. For instance, on a 500,000 CHF take out, a person in Lausanne will have to pay 63,720 CHF in taxes, compared with 30,020 CHF, that is less than half, for a person living in Zug.
“I think I will go live in Zug…”
It is the first thought that crossed every normally constituted mind. However, it is not that simple.
To be considered to be from Zug, registering, renting an apartment or driving your vehicle there on Sundays in not sufficient. Indeed, you must truly live there. Meaning you must be socially integrated.
Hitting the gym and lifting weights in schwytzerdütsch (Swiss German), going out in local bars and greeting everyone by saying « Hoi zäme » instead of « Hallo » (« grüezi mitenand » also counts), going to the Herti Allmend Stadion and cheer for the Zug 94!
Though it would allow me to reduce taxes on my withdrawal in capital, it is beyond my reach. However, solutions do exist to reduce your taxes on the withdrawal:
- Not withdrawing your private retirement fund at the same time as the professional retirement fund.
- Plan a staggered withdrawal if vested benefits exist.
- Make a withdrawal under the homeownership promotion scheme (EPL) to acquire your property in order to reduce the amount when you withdraw.
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Thank you for the information.
I would like to know what happens in the canton of Zug if the voluntary contribution to pllar 2 is withdrawn prematurely that is before 3 years. Thank you.
Hello! And thanks for your blog, very interesting and helpful :).
One question, if I withdraw a pension fund from the United States, while I live in Switzerland (not a US resident, I just happened to work there for 2 years), do you think the same 1/5 rate would apply? Or would I have to pay taxes as if it were regular extra income?
Thank you very much!