Tips and tricks to reduce your tax bill
The easiest way of reducing your tax burden through retirement planning is by paying into a retirement savings account 3a. The contributions made to the fixed retirement savings account 3a can be deducted from taxable income within the maximum amounts provided for by law. You do not pay either wealth tax or income tax on this capital until your retirement assets are paid out and you benefit from interest or returns on any investment in retirement funds. Taxes are only incurred upon premature or ordinary withdrawal of pillar 3a capital. However, you can also optimize your tax burden here by bearing a few pointers in mind.
The withdrawal of the pillar 3a triggers the immediate taxation of the capital paid out. The pension fund provider – in other words, the bank or insurance company – must notify the Federal Tax Administration of the withdrawal immediately. It calculates the tax due. The tax is then collected by the communal or cantonal tax office. The capital is taxed normally as an asset.