The reform of the federal law on the taxation of life annuities came into force
on January 1, 2025.
As a result of Parliament’s decision to revise the income tax rules for life annuities from unrestricted pension plans (pillar 3b), this pension solution has been taxed more favorably since January 1, 2025.
These new provisions will apply to both past and future policies.
Until December 31, 2024, life annuities (pillar 3b) are taxed on income at a rate of 40% of the annuity received.
From January 1, 2025, pensions will be taxed at separate rates for the guaranteed portion of the pension and for the pension derived from profit sharing (redistribution of profits).
The portion of the guaranteed annuity will be taxed according to the maximum interest rate
set by the Swiss Financial Market Supervisory Authority according to the year in which the policy is taken out, rather than at 40%. For 2024 the tax rate has been set at 1%, and for 2025 at 4%.
The portion of the pension derived from profit sharing will be taxed at 70% rather than 40%.
All holders of a 3b life annuity policy are affected by this change, and should see their tax burden lightened.
The insurer will be obliged to provide all the information required for tax purposes.
This publication contains general information and is not a substitute for detailed research or expert advice. No liability can be accepted for its content. For specific questions, please contact the author.
