Pension fund capital for an apartment/house abroad

Flat or house abroad:

 pension fund money is only available if you emigrate!

“Because of the high prices for condominiums in Switzerland, we are planning to buy a flat abroad. Can I make an advance withdrawal from my pension fund for this purpose and how is it taxed?”

In order to be able to make an advance withdrawal from your pension fund for a property abroad as part of the home ownership promotion scheme, you must also move your place of residence abroad. Because second homes and holiday homes may not be financed by the money from the pension fund.

An early withdrawal is no problem if someone emigrates to a country outside the EU: In this case, the full pension fund benefits may be drawn regardless of home ownership. If someone emigrates to an EU state, the withdrawal is limited to the extra-mandatory area.

It is different if you want to draw the money early as part of the home ownership promotion scheme: it is also permitted to use the compulsory part of the money for owner-occupied residential property in an EU country, but generally a minimum amount of at least CHF 20,000 must be drawn.

The requirements for an early withdrawal within the framework of the home ownership promotion scheme would therefore basically be met in your case. Since you withdraw the capital from the pension fund early while you are still registered in Switzerland, the money is also taxed here (at a reduced rate). If the payment is made for a residential property abroad, the withholding tax is already deducted when the advance withdrawal is paid out. If the advance withdrawal is later repaid, the tax paid will be refunded.

The money from an early withdrawal may only be used for the residential property and not for other matters. Irrespective of the tax consequences and the legal possibilities for an advance withdrawal for residential property abroad, I would like to draw your attention to the fact that the money withdrawn in this way will not be available later for retirement provision.

By the way, I consider it risky to use all your retirement savings, including Pillar 3a, for home ownership abroad and would advise you not to do so. You must also bear in mind that in addition to the purchase costs of residential property, there are also maintenance costs. In addition, you should always have financial reserves for unexpected events.

I advise you to discuss your plans in detail with us or your pension fund on the one hand and with several banks on the other. If financing becomes tight for you, I would refrain from buying a home.

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