A capital withdrawal tax on retirement assets is a tax levied on assts held in tax-privileged retirement saving categories when they are withdrawn. A capital withdrawal tax on retirement assets is typically a form of withholding tax which is deducted from assets before they are paid out.
In Switzerland, a capital withdrawal tax on retirement assets applies when tax-privileged pillar 2 (both pillar 2a and pillar 2b) and pillar 3a retirement assets are withdrawn from vested benefits foundations and retirement foundations respectively.
Contributions which you make to occupational pension funds (pillar 2) during your working life are fully tax-deductible. You do not pay income tax on income contributed to pillar 2 benefits, and you do not pay wealth tax on your pillar 2 benefits held by pension funds or vested benefits foundations. The same applies to money transferred to pillar 3a retirement foundations (pillar 3a accounts or retirement funds, for example). You also do not pay capital gains tax on interest or returns earned on your pillar 3a assets.
Capital withdrawal tax on retirement assets applies partially compensates for the tax benefits enjoyed during the accumulation phase. However, it is typically low compared to the tax savings.
The rates of capital withdrawal tax on retirement assets vary broadly between cantons. If you are resident in Switzerland at the time of asset withdrawal, the tax rate of your canton of residence applies. If you are not resident in Switzerland at the time of withdrawal, the tax rate of the canton in which the vested benefits foundation (pillar 2a) or retirement foundation (pillar 3a) holding your assets is domiciled applies.
More on this topic:
Pillar 3a retirement account comparison
Vested benefits account comparison
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