Tax trick for the rich How high earners save millions with a pension fund trick
Wealthy people in Switzerland can make considerable tax savings by paying into their pension fund. This legal practice is particularly widespread in high-tax cantons such as Bern and Geneva.
No time? blue News summarizes for you
- A third of high earners in Switzerland make large tax deductions every year thanks to their pension fund.
- In the canton of Bern, for example, 28% of the richest married couples voluntarily paid an average of CHF 517,000 into their pension fund in 2021.
- In addition, wealthy pensioners are increasingly moving to cantons with low capital withdrawal taxes.
New tax data from the cantons of Bern, Zug and Geneva show that a third of high earners in Switzerland pay large amounts into their pension fund every year to save taxes. This legal practice allows them to significantly reduce their taxable income and pay only a small amount of tax when withdrawing the capital, reports the SonntagsZeitung.
A particularly striking case from Zug shows how a high earner withdrew 7.5 million francs in retirement capital and only had to pay around 6.7 percent municipal, cantonal and federal tax, i.e. half a million francs. If the person had had to pay regular tax on the money as income, they would have had to pay around CHF 1.5 to 2 million, even in the low-tax canton of Zug.
The data shows that the incentive to avoid regular taxes is particularly high in high-tax cantons such as Bern and Geneva. In Bern, 28% of the richest married couples voluntarily paid an average of CHF 517,000 into their pension fund in 2021. In Geneva, 35% of married couples earning millions took advantage of this option. In other cantons such as Basel and Nidwalden, the use of these tax privileges is less widespread.
Companies help with tax optimization
The possibility of obtaining further tax advantages by moving to low-tax municipalities or abroad is also used. In Switzerland, there is a trend for wealthy pensioners to move to cantons with low capital withdrawal taxes. Some companies have specialized in advising wealthy individuals on how to optimize their tax burden.
Economist Marius Brülhart recommends restricting tax privileges for pension funds, as the deductions here are higher than for the third pillar. The Federal Council is planning to draw up proposals to restrict these privileges, which has led to a nationwide debate. Finance Minister Karin Keller-Sutter is under pressure as her own party, the FDP, is against such restrictions.
The editor wrote this article with the help of AI.