How much can we save in taxes thanks to the pillar 3?

Your entire pillar 3 A is tax deductible. However, the accepted fiscally deductible amount depends on your status: employed or self-employed. 

Me, Noé, legendary mascot and employee at FBK Conseils, I can deduct a maximum amount of 7’056 CHF for 2023 (it was 6,883 CHF in 2022) per year thanks to my third pillar A.

If you are self-employed, you can deduct up to 35’280 CHF in 2023 (34,416 CHF for 2022) from your taxes, if your income allows for it. 

For instance, Alex, my dentist friend, is self-employed. From his 200,000 CHF earned in 2020, he also put the maximum amount on his 3A account, that is 35’280 CHF. This amount was deducted from his taxes for the year 2020. 

Be careful: In order for Alex to be able to deduct this much with his third pillar A, he must not be affiliated on a voluntary basis to a second pillar. The second pillar question for self-employed persons is a very important decision and must be carefully considered. 

Interesting, right? 

Even better: Alex does not only deduct 35’280 CHF from his taxable income, he also thereby substantially reduces his tax rate. In other words, to the taxation authority, Alex’s net income is 164’720 CHF. When in reality, he made 200’000 CHF.

Deductibility of the 3rd pillar

This is what I call the double kiss cool effect of the third pillar 3A! 

It is one thing to know how much you can deduct from your income but it would be nice to also know what that means for your taxes!

To find out the real impact of your investment to a third pillar A, you will have to compare: 

  • Your situation without a third pillar 
  • Your situation with a third pillar

The difference between the two represents the fiscal impact (of your private retirement planning). 

Let’s take my friend Noa as an example, perennial bachelor from Lausanne with a taxable income of 70,000 CHF must pay 13,686 CHF in annual taxes, everything included, before investing in a third pillar A.

Cantonal, municipal and federal tax without 3rd pillar deduction A

Once the financial institution and the amount are chosen, he decides to go for a yearly amount of 6,000 CHF. 

Thanks to the image above, you can easily realise the impact this decision will have on your tax burden. 

Cantonal, municipal and federal tax after 3rd pillar A deduction

His tax bill thus went from 13,686 CHF to 11,844.40 CHF. This is a non-negligeable saving:  

  1. He will have saved 13% in taxes. 
  2. He will have made a 30% return on the 6,000 CHF invested. 

In conclusion, it is very frequent to see on billboards “invest in your third pillar and save 2,000 CHF”. But the answer cannot be that simple. There are numerous factors influencing your tax savings: 

  • Your income.
  • Your other deductions.
  • Your marital status.
  • Your commune and canton of residence. 

 If you wish to know the amount you can save thanks to your pillar 3A, do not hesitate to call us or use our fiscal calculator prepared for you.