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I have heard from various sources that tax has to be paid on the second-pillar pension and on old-age and survivors’ insurance (AHV). Is this tax paid in my country of residence or in Switzerland, and what is the procedure?
AHV pensions are not subject to tax in Switzerland for people residing abroad and are not taxed at source. However, they must be declared in the country of residence where they may be taxed. You need to contact the tax authority in your country of residence for a definitive answer. In the case of second-pillar pensions, this depends on whether or not you receive a pension from a public service employment relationship (federal government, canton, commune).
Pensions from public service employment relationships are generally subject to withholding tax in Switzerland. They are therefore not generally taxed in the country of residence or if they are the tax paid in Switzerland is taken into account. However, there may be exceptions depending on any double taxation agreements in force and, in particular, on the recipient’s nationality (this concerns dual citizens holding the nationality of the country of residence). There may also be double taxation in countries with which Switzerland has not concluded a double taxation agreement if the country of residence also levies a tax on these pensions.
Pensions from employment relationships under private law are subject to withholding tax in Switzerland if Switzerland has not concluded a double taxation agreement with the country of residence or if this is provided for by any applicable double taxation agreement. Double taxation may occur if the country of residence also levies a tax on these pensions which is not prevented by any double taxation agreement.
The principle that applies to taxation of second-pillar capital is that these capital payments are subject to withholding tax in Switzerland. Several double taxation agreements nevertheless provide for the opportunity to apply for reimbursement of this tax. Reimbursement is not an option in countries with which Switzerland has not concluded a double taxation agreement. Double taxation may occur if the country of residence also levies a tax on these capital payments which is not prevented by the applicable double taxation agreement.
You can obtain detailed information from the Double Taxation Agreement Department of the State Secretariat for International Financial Matters (SIF):
State Secretariat for International Financial Matters (SIF), Double Taxation Agreement Department