Tax on pension capital: the differences between cantons

How pension capital is taxed

Capital withdrawn from the 2nd or 3rd pillar is subject to a one-off tax, separate from income tax and at a reduced rate. It is made up of a federal part, identical everywhere, and a cantonal and communal part, which varies by place of residence.

It is this cantonal and communal part that creates the gaps. The federal part stays modest and uniform; most of the difference between two people comes down to the canton and commune.

Why the gap between cantons is so large

Each canton sets its own scale for taxing capital benefits, and each commune applies its coefficient. As a result, for the same capital, the total tax can be much lower in some cantons than in others.

The scales are also generally progressive: the larger the capital withdrawn in the same year, the higher the rate. The gap between cantons therefore widens on large amounts.

Residence at the time of withdrawal is decisive

It is your tax residence on the date the capital is paid out that determines the competent canton and commune, and therefore the scale applied. A move before the withdrawal can thus change the bill.

Beware: the authorities examine whether the residence is genuine. A purely formal change, with no actual relocation, can be challenged. Any optimisation through residence must correspond to a real move.

Combining with staggering

Because the scale is progressive, spreading withdrawals across several years reduces the rate applied to each. By combining the right canton of residence with a staggered withdrawal schedule, the tax saving can be substantial.

For a couple, splitting withdrawals between both spouses and across several years multiplies the reduced-rate brackets further.

Estimate your situation before deciding

Before choosing between a pension and a lump sum, or setting the date of a withdrawal, it helps to quantify the tax in your canton and compare it with other scenarios. Cantonal gaps can weigh heavily in the trade-off.

RetirePlan estimates the tax on your capital based on your canton and your withdrawal schedule, and compares scenarios to identify the most advantageous one.

Frequently asked questions

Is the tax on pension capital the same everywhere in Switzerland?

No. The federal part is identical, but the cantonal and communal part varies widely. For the same capital, the total tax can be much lower in some cantons than in others.

Which canton sets the tax on my capital?

The one where you have tax residence on the date the capital is paid out. A genuine move before the withdrawal can therefore change the scale applied, provided it reflects an actual relocation.

How can you reduce the tax on a lump-sum withdrawal?

By staggering withdrawals across several years to limit progressivity, splitting between spouses, and taking into account the canton of residence at the time of payment.

Is the scale progressive?

Yes, in most cantons: the larger the capital withdrawn in the same year, the higher the rate. That is why staggering reduces the total tax.