Help required with relocation to Switzerland

[crownfair]

I am a UK citizen, recently moved to Switzerland and plan on living here with my Swiss wife.

I have close to 70 K GBP in savings in the UK, which i was investing but decided to liquidate as i was moving here. I am really keen on getting the money into different uses, but i have no idea how manageable would that make tax sitaution. I used to use tax free ISA in the UK for investing, and tax free ISA for savings, but i dont know if those are options here in Switzerland?

Also, I would generally go for more than one fund (i usually go with ETFs to minimise risk) ... what are some of the good funds that one can rely on for good growth (with the usual caveat of nothing is given for sure)?

Thank you in advance for any comments and contribution

 

[sunshine8]

@crownfair Capital gains are tax free unlike the uk. However dividends are added to your income and taxed in Switzerland. Dividends are estimated for accumulating ETFs and still taxed accordingly. The best funds to minimise taxes on dividends are US domiciled funds assuming you fill out a tax return in Switzerland in order to claim back the withholding taxes already paid.

The other tax to consider is wealth tax but if your total wealth is less than 100k then it is going to be a small amount.

The closest thing to an ISA would be the third pillar pension, which lets you add up to ~7k per year. The main benefits are that you can reduce your taxable income for the year by the amount you deposit, and it is immune from wealth and dividend tax. The best providers are VIAC or Finpension (my preferred) due to their flexibility of choosing funds and their low fees. 3rd pillar does tie up your money though unlike an ISA, with restrictions on when you withdraw such as moving abroad, buying a house, becoming disabled or retiring. There is also tax when you withdraw the money (tax is less than your normal income tax rate). Because of these reasons you probably should only use a 3rd pillar if you have taxable income in Switzerland and you plan to fill a tax return to claim the deduction.

 

[ruzou]

@sunshine8 He has to file a tax return (married to a Swiss citizen) so should consider it if working.

 

[ruzou]

@crownfair Fellow Brit here.

The only real wrapper here is pillar 3a (sometimes just called pillar 3). That's limited to approx 7k CHF a year.

You need have taxable (self)employment income to take advantage of that. It's basically like a SIPP, but with more limited investment options. But you can still invest near 100% in equities with finpension or viac.

Although the limit is extremely low, it's more tax efficient than a sipp as its tax free on the way in and taxed at a special low rate on the way out. IMO it's a no brainer.

Beyond that, there's not much else. It's not like the UK with SIPPs, ISAs, LISAs, EIS, VCTs.

You can also invest in pillar 2, although it's probably a bad idea to do so unless you are close to retirement age. Performance will be crap. Possible exception if you have access to a management pillar 2 with decent options.

 

[mbch]

@ruzou I think investing in 2nd pillar may not be a bad thing depending on where you are on the progressive tax scale?

 

[ruzou]

@mbch Well if you are 30, that's 35 years of poor performance.

If it appreciates at 1% a year you have will only have a 41% performance in those 35 years.

If it grows at 5% in the stock market, you get 550%.