At the webinar on the topic of taxes and finance, many questions could not be answered due to time constraints. From the more than one hundred questions submitted, we have selected fifteen, partly generalised them, and provide short answers below:
1. Which countries have concluded a double taxation agreement (DTA) with Switzerland?
You can find a list of double taxation agreements via this link. While there are many agreements to avoid double taxation on income (and wealth), there are only a few agreements on the coordination of inheritance taxes (Denmark incl. Faroe Islands, Germany, Finland, Netherlands, Austria, Sweden, United Kingdom, USA).
2. How is the taxation of a lump-sum withdrawal from a vested benefits account handled if I live abroad?
In principle, the vested benefits foundation must always deduct withholding tax in such cases. The taxation is based on the withholding tax rate of the canton where the vested benefits foundation is domiciled. However, this does not conclude taxation. The double taxation agreement determines how double taxation is avoided. Most DTAs provide that, for pension benefits from private-sector employment, only the country of residence has the right to tax. In these cases, the Swiss withholding tax can be reclaimed. However, there are exceptions: for pension capital from public-sector employment in Switzerland, Switzerland generally reserves the sole right to taxation.
3. I have heard that it makes sense to transfer my pension capital first to a low-tax canton. Is this true?
A payout via a low-tax canton can be worthwhile if Switzerland does not refund the withholding tax and the country of residence either does not tax the funds or does not credit the Swiss tax. However, do take fees into account. For smaller amounts, using Schwyz or another low-tax canton is often not worthwhile.
4. I worked for the Swiss Confederation. Can I reclaim Swiss withholding tax on my occupational pension or my lump-sum withdrawal from the 2nd pillar?
In such cases, Switzerland generally reserves the right to taxation. You cannot usually reclaim the withholding tax.
5. Where do I pay tax on my AHV and on my pension fund capital if no double taxation agreement exists with my country of residence?
Switzerland does not tax AHV if you live abroad. However, a lump-sum withdrawal or pension from the pension fund will be subject to Swiss withholding tax, which cannot be refunded without a relevant DTA. It then depends on the tax rules of your country of residence whether AHV and pension benefits are taxed there. Especially for 2nd pillar pension capital and annuities, there is a real risk of double taxation.
6. I want to withdraw capital from the 2nd pillar to buy a self-occupied property in my EU country of residence. Is this possible, and how is it taxed?
Swiss law generally allows pension capital to be used for a self-occupied property in the EU under similar rules as for a property in Switzerland. Taxation depends on the double taxation agreement and national laws. Note that in some countries, the timing of the withdrawal can significantly influence the tax burden. Check carefully whether, in addition to taxes, social security contributions in your country of residence may also be due on the withdrawal.
7. I bought a property in Switzerland but spend less than 90 days a year there. How is taxation handled if I use it as a holiday home? Will my worldwide income and wealth be considered? What if I rent it out?
You will in any case pay tax in Switzerland on the property. On the one hand, you pay tax on the property’s value. On the other hand, you pay tax on income – either on the imputed rental value or on rental income. Certain deductions (e.g. mortgage interest or renovations) are possible even if you live abroad. To determine the tax rate, most cantons require information on your worldwide income and assets. Note also that you generally need to declare the property in your country of residence too. According to most DTAs, that country is also entitled to tax property and property income, but usually credits Swiss tax. Your country of residence is not bound by the Swiss official property valuation and may assess its own value. Many countries do not recognise or tax an imputed rental value. Deduction rules may also differ from Switzerland.
8. Is there a gift tax between siblings if one sibling lives in Switzerland and the other abroad?
In Switzerland, gifts of money or movables are generally taxed at the donor’s place of residence – with the recipient liable to pay the tax – and most cantons levy a gift tax on siblings above a certain allowance. If the donor lives in Switzerland, you must therefore expect Swiss gift tax. If the recipient lives in Switzerland but not the donor, Switzerland does not levy gift tax. For Swiss property, Switzerland considers the property’s location as decisive. In all cases (donor or recipient in Switzerland, property in Switzerland), you must check the rules in the other country of residence to see if it also taxes the gift. Unfortunately, there are no DTAs for gifts.
9. How many years must I have paid AHV contributions in Switzerland to receive an AHV pension?
You must have been insured with AHV for at least one year and have paid at least the minimum contribution for that year in order to receive a pension. The amount of an AHV pension is based on the average annual AHV-contributory income and the number of qualifying contribution years.
10. What options do returning Swiss abroad have to close AHV gaps?
Unfortunately, if there was no AHV liability during residence abroad, gaps cannot be closed. If you were required to pay AHV (e.g. as a student or globetrotter) but failed to do so, you can pay in arrears for up to five years. In all other cases, no back payment is possible. Indirectly, gaps can be mitigated by voluntary purchases into the 2nd pillar, but this requires being employed again in Switzerland.
11. I have lived abroad for some time. Can I later join the voluntary AHV?
There are various conditions for joining voluntary AHV. One of them is that the application must be made within one year of leaving the compulsory AHV scheme to ensure continuous coverage. Once this deadline has passed, joining is no longer possible.
12. Where is my AHV pension taxed? Can I have the AHV paid to a Swiss account to reduce the tax compared with payment to my account abroad?
Switzerland currently does not tax AHV pensions if you live abroad, as there is no legal basis to do so. In most cases, your country of residence is responsible for taxation. With very rare exceptions, it does not matter whether the pension is paid to a Swiss or foreign account.
13. I paid into the voluntary AHV but could not deduct the contributions from my taxes. Is it lawful that my AHV pension is now still taxed?
Unfortunately, yes. If you move your residence back to Switzerland, the AHV pension will be taxed even if you could not deduct the contributions from your taxable income. Whether other countries treat it the same way depends on their national laws.
14. I work online from my country of residence for my Swiss employer. Where do I pay tax? Can I choose or influence this?
In principle, you pay income tax where you work, i.e. usually your country of residence. However, a detailed analysis with a tax expert is always worthwhile. Clarification should also include social security affiliation and the tax implications for your employer, as in some cases the company may also become liable for tax in your country of residence (permanent establishment risk).
15. If I am tax resident in another country, do I automatically lose Swiss social security?
Taxes and social security must always be considered separately. Different rules apply.
When it comes to finance and taxation, always seek professional advice – mistakes can happen easily and can be costly!
Schlagworte:FinanzenFragen und AntwortenSteuern