How Switzerland taxes a retirement plan

We model these and we know we do not get them exactly right. Where the size could be measured, it is stated.

• Money inside a Swiss pension scheme is outside the yearly wealth tax, and the day you take it out it becomes taxable wealth for good. We never move it across, so a plan that takes a lump sum keeps an exemption it should have lost. On 500,000 francs that is worth about 1,750 francs of wealth tax a year at the flat rate we use, and between 2,161 a year in Zug and 6,768 in Lausanne at the rates cantons actually charge.

  Your real tax is higher/up to CHF 6’768 a year/anyone taking pension savings as a lump sum and keeping the money invested

• Federal income tax can never take more than 11.5 percent of your income, and our scale keeps climbing past the point where that ceiling takes over. On a million francs of taxable income in one year we show 118,503 francs where the true figure is 115,000, about 3 percent too much. It starts only above roughly 794,000 francs of taxable income, so it is unlikely to reach a retirement plan.

  Your real tax is lower/up to CHF 3’503 a year/anyone with more than about 794,000 francs of taxable income in a single year

• Swiss couples are taxed together on their own federal scale, and we rebuilt that scale from the eight points the tax office publishes. Between those points we charge a little too much. The 2,700 franc allowance is also not doubled for a couple, because no married amount was published, which costs about 764 francs a year. The bigger caveat is that the cantonal part was only ever checked against single people's bills, so a couple's Swiss figure is the least tested one we produce.

  Your real tax is lower/up to CHF 764 a year/married couples in Switzerland

• A few cantons charge a flat amount per adult each year, between 20 and 70 francs, on top of everything else. It is already inside the tax bills our cantonal figure was fitted to, so it is not missing so much as not shown on a line of its own. At that size it changes nothing in a plan.

  Could go either way/up to CHF 70 a year/adults in the cantons that levy a flat yearly charge, including Zurich, Lucerne, Ticino, Valais and Geneva

• Money taken out of a Swiss pension pot is taxed at its own rate, and we charge one flat 4.6 percent. The rate charged climbs with the size of the payment: about 4.6 percent on 100,000 francs, 7.1 percent on 500,000 and 8.0 percent on a million. So a single large withdrawal is understated. It also means we cannot show you what spreading the payments across tax years saves, which is 14 to 47 percent of the bill, and the rate varies fourfold between cantons.

  Your real tax is higher/up to 47.0% of taxable income/anyone taking pension savings as cash rather than as an income, above all in one large payment

• Where in Switzerland you live decides most of your tax bill, and we do not ask. The cantonal and communal part is several times the federal part, and on the same 100,000 francs of income it runs from 5,499 a year in one Swiss town to 25,480 in another. We stand in for all 26 cantons with a single figure fitted to a Zurich bill, and it lands about a third below what a typical Swiss location charges. Unless you are in one of the cheapest cantons, the tax shown here is too low.

  Your real tax is higher/up to 36.9% of taxable income/anyone retiring in Switzerland outside the cheapest cantons, which is most Swiss locations

• Each canton works out its own taxable income first, using its own deductions, and we apply the cantonal share to the federal figure instead. On one worked case the federal taxable income was 38,800 francs everywhere, while the cantonal figure was 37,150 in Zurich and 21,826 in Zug on identical facts. Our cantonal figures are fitted to measured bills, so the difference is absorbed near the incomes they were fitted at and drifts either way further out.

  Could go either way/anyone in a canton with generous deductions, and anyone whose income is far from a typical retirement one

• A private Swiss annuity is not taxed in full. Only the part counted as investment income is taxed, and at today's interest rates that is a single digit percentage of each payment, so an annuity bought recently is close to tax free. We have no way to record that, so an annuity entered here as a pension is taxed on the whole amount and we show far more tax than you would pay.

  Your real tax is lower/anyone who has bought a private Swiss annuity and enters it here as a pension

• We treat gains on selling shares and funds as free of tax, which is the Swiss rule. It is not quite unconditional: one of the tests asks whether you are selling because you need the money to live on, usually read as gains above half your income. Failing that one test does not by itself make you a trader, and a buy and hold retiree shows none of the other markers, but the exemption is not a guarantee.

  Your real tax is higher/anyone living mainly on the proceeds of selling investments, where gains come to more than about half their income

• A fund based outside Switzerland has tax taken off its dividends in the country the money came from. Switzerland lets you reclaim part of that, by treaty and by a claim made with your tax return, and we could not establish how much comes back. Whatever does not come back is treated here as a cost on your returns rather than as a tax, so it does not appear in the tax figures on this page.

  Could go either way/anyone holding a fund based outside Switzerland

These exist in law and we leave them out, usually because applying them would need a question we do not ask.

• If you live in Switzerland, have stopped working and are under 65, you must still pay old age and disability insurance contributions. They are worked out from your wealth plus twenty times your pension income rather than from earnings, and run from 530 to 26,500 francs a year each until 65. We could not get the table that turns wealth into a figure, so we charge nothing, and every year of an early Swiss retirement is understated by whatever you would owe.

  Your real tax is higher/up to CHF 26’500 a year/anyone retiring in Switzerland before 65, which is what an early retirement plan is

• Swiss churches are funded by a tax on their registered members, and we set it to zero for everyone. If you are a member it adds roughly 5 to 15 percent on top of your cantonal and communal income tax, and the same again on the wealth tax. You leave it by formally leaving the church. Vaud, Neuchatel and Geneva do not charge individuals at all.

  Your real tax is higher/up to 15.0% of taxable income/registered members of a recognised church, outside Vaud, Neuchatel and Geneva

• Vaud gives people on modest incomes a deduction and withdraws it again as income rises. That makes the tax on an extra franc peak near 38 percent at about 55,000 francs of taxable income before falling back to about 25 percent by 65,000. We charge a rate that only ever rises with income, so that hump does not appear and the tax on income inside the band can be wrong either way.

  Could go either way/anyone retiring in Vaud with taxable income between about 55,000 and 65,000 francs

• Six cantons cap your income tax and wealth tax together at a share of your income, and we do not apply the cap. It bites for exactly the shape this tool models, a large balance next to a small declared income, and where it bites an extra franc of income can lower the wealth tax you actually pay. The wealth rate we use was measured with the cap already working, so part of it is absorbed, but we could not get the cantonal formulas themselves.

  Your real tax is lower/anyone in Bern, Lucerne, Zurich, Geneva, Vaud or Valais with a large portfolio and little declared income

• Your home counts towards the Swiss wealth tax, at a value each canton sets deliberately below what the house would sell for. We could not find a dependable figure for how far below, and would rather leave it out than guess, so no part of your home is in the wealth charge here. Debts come off your wealth in full, so an owner still carrying a large mortgage is the one this leaves out least.

  Your real tax is higher/anyone who owns their home in Switzerland, most of all one with no mortgage left

• Switzerland taxes homeowners on the rent they would have paid to live in their own home, at roughly 60 to 70 percent of the market rent. We do not charge it, so an owner's income tax is understated. It is abolished from 2029 after a national vote, along with the relief for mortgage interest and upkeep that goes with it, and we cannot switch from one regime to the other part way through a plan.

  Your real tax is higher/anyone who owns their home in Switzerland, most of all one with no mortgage left

• Some cantons charge a yearly tax on the full value of a property, with no deduction for the mortgage on it, at between 0.05 and 0.3 percent of that value. Bern, Fribourg, Grisons, Ticino, Vaud, Valais and Jura are among them, and Zurich and Zug do not charge it. We do not model property, so it is absent from every figure here.

  Your real tax is higher/property owners in the cantons that levy it, including Bern, Fribourg, Ticino, Vaud, Valais and Jura

• A Swiss fund that owns property directly pays the tax at the fund, and the income reaches you free of tax without even pushing up the rate on the rest of your income. We tax investment income the same way whatever it comes from, so holding one of these shows more tax here than you would pay. It is the one genuine domestic tax advantage Switzerland offers an investor.

  Your real tax is lower/anyone holding a Swiss fund that owns property directly

Separate tax systems, or rules that only bite outside a retirement plan.

• Selling a Swiss property is taxed by the canton on the gain, at a rate that falls the longer you owned it, and it can be rolled over if you buy another home to live in. What we model is a portfolio of shares and funds, where gains are free of tax, so a property sale sits outside this.

  Could go either way/anyone planning to sell a Swiss property

• Workplace pension rights built up before 1987 are only 80 percent taxable, and we tax the whole amount. Anyone that covers is 80 or older today, so it falls outside any plan being made now.

  Your real tax is lower/anyone aged 80 or over whose workplace pension was built up before 1987

• Selling a large stake in a private company can have part of the proceeds treated as a dividend and taxed as income, instead of as a gain free of tax. It reaches company owners rather than a spread of listed shares and funds, so we leave it out.

  Could go either way/anyone selling a substantial stake in a private company