Some people may be interested in keeping their Swiss bank accounts open when they leave the country. This may be to diversify their cash holdings, to beneﬁt from holding a hard currency in a safe jurisdiction, to receive rent and/or make home loan repayments on a Swiss property etc.
Whilst it may be possible to keep your Swiss banking arrangements in place when you leave the country it is important to ask your individual bank for advice before leaving. Their decision will likely depend on your nationality, your new residential local and your new employment and/or employer.
If your bank does allow your accounts to remain open, in most cases, they will likely begin to charge you non-resident fees when you leave – these will be higher than fees applicable when you are residing in Switzerland.
Some banks may not terminate your account when you leave, but they may restrict the services that have previously been offered – credit card facilities for example. Again, it is important to ask your provider.
Whether you are planning to leave Switzerland on a temporary or a permanent basis it is important to understand your options and obligations.
For most people, during their employment in Switzerland, they will have built up reserves of cash, social contributions and various pension pots. On departure, there will be various options to consider.
Receiving the pension
The first distinction to make is whether you are a citizen of the EU, EFTA or a country that Switzerland has a bilateral social security agreement with. If this is the case then you will be eligible to receive the government pension once you reach retirement age.
Normal retirement age is 64 for women and 65 for men. However, you may draw your OASI pension up to two years before this age. You may also defer receiving benefits for up to five years after normal retirement age. Both options will have an effect on the pensionable amount you would receive. You are not able to reclaim contributions made into the scheme at any time, only benefits from the scheme.
If you are not a citizen of a country listed above and are leaving Switzerland permanently then you may have the right to receive back all of the contributions that you have made (both from your side as well as your employers) during your employment in Switzerland. If this is the case then please contact your financial advisor before leaving the country to understand your options.
Pension: Government (OASI)
In most instances a persons Pillar 1 contributions will end when they leave Switzerland. There may, however, be exceptions to this rule. For some people there could be a significant benefit in continuing to contribute to both the Old Age and Survivors Insurance scheme (OASI) and the Disability Insurance (DI), which could allow them to receive a full government pension upon retirement and remain protected against disability whilst they remain working.
To have the option of paying into and receiving benefit from both schemes when you leave the country certain restrictions apply. You would need to either be a Swiss citizen or a citizen of an EU or EFTA (European Free Trade Association) country or of a country which Switzerland has a bilateral social security agreement with(https://www.ahv-iv.ch/p/890.e). Also, you must be registered with the Swiss social security system (AHV/AVS) and have been contributing to the scheme for a least five years without interruption.
Finally, the country that you are moving to cannot be within the EU, EFTA or a country that Switzerland has a bilateral social security agreement with.If the above applies then you may have the option to keep making OASI and DI contributions. This is a fixed amount per year, based on your annual income, and is set at a percentage of your salary. It is important to remember that, unlike when you are resident in Switzerland, this contribution would likely not be tax deductible.
As Switzerland does provide a high level of protection (disability and pension) this is an important area to consider when you begin planning to leave the country. It is always best to seek the advice of your financial advisor on all matters before you leave.
Pension: Occupational scheme
If you are leaving Switzerland to reside in a country within the EU/EFTA then you will normally have the ability to withdraw the non-mandatory part of your occupational (or vested beneﬁt) Pillar 2 scheme. The mandatory part of the scheme will usually have to be transferred to a vested beneﬁt account and invested within this framework. There may be exceptions to this rule, for example buying a primary residence in the country that you will next live.
If you are moving to a country outside of the EU/EFTA then you will have the ability to withdraw both parts from your Pillar 2 account. It should be noted that whereas Pillar 1 withdrawals are dependant on your citizenship, Pillar 2 withdrawals are determinant upon your new country of residence.
Taxation of beneﬁts
Pillar 2 beneﬁts are taxed when you withdraw these funds. If you live in Switzerland this can be from the age of 58, although the normal retirement age is 64 for women and 65 for men. If you reside in Switzerland when drawing beneﬁts then the tax applied will be that of the canton that you reside in.
If you leave Switzerland and withdraw your Pillar 2 beneﬁts (when you leave or in the future) then the tax applied will be that of the canton that your Pillar 2 scheme is registered. Such tax rates can vary signiﬁcantly from canton to canton.As you have the ability to move Pillar 2 pension schemes into and between vested beneﬁts schemes in Switzerland it is important to seek advice on the most tax efﬁcient means to withdraw your pension funds.
There could be signiﬁcant savings to be made by moving your Pillar 2 funds into a low-taxed cantonal scheme.It is also important to speak to your ﬁnancial advisor about any Double Taxation Agreement (DTA) that Switzerland may have with the country that you are tax resident in, when you choose to draw beneﬁts from your Pillar 2 account. In certain circumstances you may pay tax on the Pillar 2 withdrawal in your new country of residence. In this case, you would then need to reclaim the Swiss withholding tax via this DTA.
Normally, whilst resident in Switzerland, you are able to withdraw funds from Pillar 3 accounts;
- At retirement
- For property purchase
- When starting a business
- If you become self-employed
As per the Pillar 2, if receiving beneﬁts from a Pillar 3 account when resident in Switzerland, the tax will be charged at the prevailing rate of the canton that you live in.
If you leave Switzerland, it doesn’t matter which country you may move to, you have the ability to withdraw funds from your Pillar 3 accounts. It is important, however, to ﬁrst consider whether a withdrawal of beneﬁts is in your best interest. Insurance 3rd pillars, for example, will normally have lower surrender values than the investment values shown if withdrawn early. You would also be giving up additional beneﬁts, such as life insurance and the ability to continue contributing to the scheme from abroad.
When you do come to withdraw Pillar 3 funds from abroad, Switzerland will charge a withholding tax at a rate dependant on the canton that the Pillar 3 scheme is registered. Again, it may be possible to move Pillar 3 funds to a lower taxed canton before withdrawal. Double Taxation Agreements (DTA’s) would also apply so that if you pay tax on this withdrawal in your new country of residence you may reclaim the Swiss tax via this DTA. Again, we would always urge that you speak to your ﬁnancial advisor to receive tailored advice relative to your circumstances.
Unlike the Pillar 1 (for most people) and Pillar 2 pension schemes, the Pillar 3 pension is the only scheme in which you can continue to contribute to when you leave the country. Although, this opportunity is only available via Insurance 3rd Pillars. If you have a banking 3rd pillar you will not be able to continue contributing once you leave the country.
This is an important aspect to consider for many people. The Pillar 3 provides excellent beneﬁts, normally including strong growth in a hard currency and life insurance protection. For many, it makes a lot of sense to continue contributing into their Pillar 3 accounts when they leave the country.When you leave Switzerland, if you hold a Pillar 3A account, all future contributions will be treated as if the account was a 3B. That is, contributions are no longer tax deductible (you are not a Swiss tax resident), but all beneﬁts are paid free of any Swiss withholding tax.
If you hold a 3B account it will continue as normal. The only beneﬁt that will be lost when you leave the country is any disability cover included in the account. Normally, all life insurance protection remains unaltered, but it is best to check this with your ﬁnancial advisor or the scheme itself.
Practically, when you leave the country you are able to open a speciﬁc premium deposit account, from which you can fund your Pillar 3 account in the future. The deposit account itself can be funded before and after you leave the country, either on a regular or ad hoc basis. This means that you do not need to keep your Swiss bank account open when you leave, which may result in higher non-resident fees.