Tax deductions can be made for payments for life insurance and pensions. Home owners can also benefit if they claim premiums as maintenance costs.
Here, the most interesting aspect relates to personal pensions in pillar 3a. During the accumulation period, employees who are insured with a pension fund can deduct a defined maximum amount from their taxable income, currently CHF 6,768. Self-employed individuals who are not affiliated with a pension fund can pay 20 percent of their income into pillar 3a, but no more than a defined maximum amount, which is currently CHF 33,840 per year. For more details about pillar 3a, I recommend reading the interview with pension expert Reto Kleiner.
In the 3b model, you either pay a single amount or make periodic premium payments. Neither is really tax deductible. What you do not have to pay taxes on, however, is interest income, and the payout is completely tax exempt. This, and the insurance component are advantages compared to bank saving plans.
Life annuities that are structured as 3b plans enjoy favourable tax treatment, but you will have to pay tax on 40 percent of the regular pension payments. This makes them less attractive in terms of taxes.
Every employee has the option to check whether the pension fund’s regulations allow them to make extra voluntary contributions. The maximum amount for the contributions, often termed “purchases”, is usually shown on the pension fund statement. These are nothing more than savings contributions made to a pension fund instead of a bank account, but with better interest rates and full tax deductibility. However, later withdrawals of this money will have to comply with the pension fund regulations.
Capital withdrawals are subject to income tax, albeit at a reduced interest rate. The tax rate for federal taxes, for example, is one-fifth of the regular income tax rate. The cantons also offer reduced rates, although they vary from canton to canton. This also applies to 3a capital withdrawals, by the way. Pension payments are less attractive from a tax perspective as they are fully taxed as income.
Absolutely. The premiums, both for basic insurance and for supplementary insurance are fully tax deductible up to a certain ceiling. Premium reductions, however must be deducted from the premiums.
On their tax return, home owners can claim all the payments made to insurance companies directly associated with the building, such as owner’s liability and buildings insurance, as maintenance costs. And let’s not forget property tax, which is also tax deductible.