Epargne 3 account
With the Epargne 3, you can accumulate capital allowing you to maintain your standard of living in retirement. Benefit from the substantial and immediate tax advantages granted to a 3rd pillar*.
Revision of withholding tax in 2021
The federal law on the revision of withholding tax was passed in December 2016 and will apply from 2021. It aims to reduce the unequal treatment of persons subject to withholding tax and those subject to ordinary taxation, and to standardise the calculation of withholding tax throughout Switzerland. Below are some explanations of the consequences for taxpayers.
What's new for taxpayers
The law introduces a subsequent ordinary taxation (TOU Taxation Ordinaire Ultérieure) for all resident taxpayers taxed at source and, under certain conditions, for non-residents.
- Subsequent ordinary taxation is mandatory for taxpayers whose gross income subject to withholding tax exceeds CHF 120'000 at federal level (in Geneva, the threshold for a couple is currently CHF 500,000), or who have income or assets not subject to withholding tax.
- For other resident taxpayers, it is optional and must be expressly requested before 31 March of the year following the tax year concerned. Residents who are subject to subsequent ordinary taxation (whether mandatory or at his request) remain subject to this regime in subsequent years, in parallel with the withholding tax charged.
- All taxpayers who are neither Swiss, nor married to a Swiss, nor holders of a C permit, will continue to be taxed at source for security purposes. However, they will be taxed retroactively according to the ordinary rules and rates. The amount of tax withheld at source will be charged without interest. This means that some B permit holders who were no longer subject to withholding tax will be taxed at source again (e.g. real estate owners with a B permit).
- Subsequent ordinary taxation has also been introduced for non-residents, but only by application submitted before 31 March of the year following the tax year concerned. A non-resident taxpayer can benefit from it if 90% of his worldwide income is taxable in Switzerland. Since ordinary taxation of non-residents is optional, the application must be renewed each year.
- As for residents domiciled in Switzerland, cross-border workers will no longer be able to deduct 3rd pillar A contributions, 2nd pillar purchases, alimony payments, childcare costs and training costs.
If a taxpayer wishes to deduct 3rd pillar A contributions, pension contributions, alimony, training costs or childcare costs, he must apply for subsequent ordinary taxation and, if he is a non-resident, fulfil the required conditions.
An Epargne 3 account to plan aheadThe 1st and 2nd pillars are not always enough to maintain a pre-retirement standard of living. The Epargne 3 account enables you to accumulate the required capital while benefiting from the substantial and immediate tax advantages that are granted to a 3rd pillar*.
You can deduct the annual amount paid into your Epargne 3 account from your taxable income.
An Epargne 3 account to reduce your tax liability
The Epargne 3 account is exempt from tax (on wealth, income and from withholding tax on interest) during the capitalisation period. A specific tax, modest in comparison to the savings realised, is charged on release of the account.
Every five years, you have the opportunity to free your Epargne 3 assets to finance your main residence or to pay off the mortgage on it. Tax-wise, the deferred repayment of a mortgage is very advantageous: the amount of the repayment is not paid directly to the bank, but is accumulated in your Epargne 3 account. This means that in terms of your income and capital you benefit as much from the tax advantage of the Epargne 3 account as from the deduction of the mortgage debt.
An Epargne 3 account to invest
Your Epargne 3 account can also enable you to buy 2nd pillar contributions.
Your Epargne 3 account can be released to enable you to set up business on your own. Then, with self-employed status, you can once again contribute to the 3rd Pillar to build up your retirement pension.
Epargne 3 savings can be managed in one of two ways:
Two management options
- BCGE savings account with an attractive rate which benefits from a Geneva State guarantee up to CHF 500,000 per person
- a pension fund savings plan enabling you to invest all or part of your savings in the investment funds of the Synchrony LPP Funds umbrella in order to take advantage of higher long-term yield prospects
In addition, thanks to the Avantage Service loyalty programme, your Epargne 3 account earns you interest bonuses on your BCGE Epargne account each year.
Avantage Service loyalty programme
* In accordance with the provisions of the ordinance of 13 November 1985 on tax-admissible deductions for contributions paid to recognised forms of pension plan products (OPP 3).
An account for employees and the self-employedThe Epargne 3 account is designed for employees and independent professionals who are subject to income tax, aged 18 and above, up to a maximum of the normal AVS (state pension plan) retirement age. The benefits of the Epargne 3 account are maintained in the event of ongoing paid employment and up to the age of 70.
Maximum payment amounts
The legally authorised payment amounts in 2021 are as follows:
- for persons affiliated to a pension fund: maximum CHF 6,883 per year
- for persons not affiliated to a pension fund: 20% of income, but a maximum of CHF 34,416 per year
The assets deposited in Epargne 3 are accessible under the following conditions :
- You have reached the normal age for withdrawal from the AVS or at the earliest 5 years before you retire
- You become self-employed or you change your self-employed income source activity (in the 1st year only)
- You leave Switzerland definitively (for non-residents, when you cease all paid employment in Switzerland)
- You receive a full federal incapacity benefit (AI) pension
- You wish to finance your main residence
- You wish to pay off a mortgage on your main residence
In the event of death, your capital is protected and paid out to the beneficiaries in accordance with the law; it does not form part of your estate.
Epargne 3 assets cannot be seized so long as they remain invested within the framework of the associated 3rd pillar.