2nd Pillar (BVG) taxes when abroad


New member
Hello everyone! Does anybody know how would your 2-pillar early withdrawal be taxed, if you'd leave CH a few years after stopping working? By that time your 2nd pillar savings are at some custody accounts. Would the canton of your last residence tax them or rather the canton of the pension institutions, where the custody accounts are?
Taxation of 2nd pillar savings when moving abroad is one of the most complicated matters. I'm finishing my PhD in Law about this topic ;) (This is no legal advice. Each situation comes with individual problems and generall statements that apply to everyone are really difficult to make.)

Yes, in Switzerland payments from the 2nd pillar (directly from a pension or a Freizügigkeitseinrichtung/institution de libre passage/istituto di libero passaggio) are taxed in the canton the foundation is based in when the recipient lives abroad. The tax rates can be progressive or linear. There are the usual suspects that offer low tax rates: Schwyz, Obwalden, Nidwalden, etc. If you have a just a small amount some french speaking cantons can charge very little too (e.g. Geneva) because they have a progressive taxation. Sometimes that starts at 0%. For bigger amounts go with mentioned german spaking cantons (linear tax rates). The taxes are payed in the form of a withholding tax (Quellensteuern).

When you move to a EU-Country (incl. Norway and Iceland) the mandatory pensions savings are bound till retirement. Many employers offer additional pension savings (überobligatorische Leistungen in German). These additional savings can be payed out when you move abroad and stopp working in Switzerland. If you move to a third country you can take all your pension savings with you no matter your age. When going to Liechtenstein all savings are bound till retirement.

Then it gets complicated. We have double taxation agreements (DTA) with many countries that cover 2nd pillar savings. To find out if your new home country has such a DTA and how it treats pension savings google: "SIF Doppelbesteuerungsakommen". You'll find a link to all the DTA. Most important findings, when looking at these DTA (over siplified):
- When your last employer was the Swiss government, a Canton or a Municipality the withdrawl is taxed in Switzerland (you already payed that with the withholding tax). There are a few special cases where this rule of thumb will not apply.
- All other 2nd pillar savings are taxed in the new country of residency or Switzerland, depending on the agreement. If you want to find out what's the case for you, look into the DTA and/or get help from an expert on DTA.
If your new country of residency is the only country that can tax the withdrawl of 2nd pillar savings you can get the swiss withholding tax back. Just fill out and hand in the form. You can find it online if you google "EST Schweizerische Quellensteuer". The page exists in German, French and Italian and the form is hidden in the Q&A section. Pleas do that within tree years of the withdrawal.
What kind of taxes you have to pay in the country of residency is difficult to predict, because the taxation of 2nd pillar savings varies a lot and not all countries know an early withdrawal. In some cases the withdrawl of 2nd pillar savings isn't taxed at all. Sometimes you pay a higher a amount than you would have in Switzerland.

This is a a very high-leves overview. There are many conflicts and different interpretations of the agreements that can lead to problems or that (sometimes) can be used to plan your withdrawels and pay as little taxes as possible.

3a is similar but not exactly the same. Most of the time the country of residency is entitled to tax that withdrawal (there are some exceptions) and you can get the swiss withholding tax back (same form as for 2nd pillar).
When you move to a EU-Country (incl. Norway and Iceland) the mandatory pensions savings are bound till retirement.
Since many forum participants consider early retirement, I would mention that AFAIK the binding is valid in case of being obligatorily pension-insured in the new country of residence. This might be not valid in case of self-employment or no employment. Additionally, the second pillar savings may be used for buying self-used real estate in the new country of residence. Please correct if I am wrong.
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