For many Swiss residents, contributing to Pillar 3a is one of the easiest ways to save tax. But if you hold a B permit, the benefits depend on how you are taxed. Here, we break down everything you need to know before contributing.
What is Pillar 3a in Switzerland?
Pillar 3a is a voluntary retirement savings plan in Switzerland that allows you to set money aside each year and reduce your taxable income. Pillar 3a investments also grow tax-free while invested.
You can withdraw your savings if you:
- Leave Switzerland permanently
- Buy a primary residence
- Reach retirement age
- Start a sole proprietorship as a main profession
How are B-permit holders taxed in Switzerland?
Most expats on a B permit pay withholding tax (Quellensteuer). Your employer deducts tax directly from your salary each month.
B-permit holders must file a Swiss tax return if gross income exceeds CHF 120,000 per year. In some cantons, you may also need to file if you own property, earn additional income, or have significant wealth.
Can B-permit holders benefit from Pillar 3a?
The main advantage of Pillar 3a is the tax deduction on your annual contributions. However, this deduction is only applied through filing a tax return:
- If you only pay withholding tax and do not file a tax return, you cannot claim the Pillar 3a deduction.
- If you file a tax return, you can deduct your Pillar 3a contributions from your taxable income.
When does Pillar 3a make sense for B-permit holders?
A Pillar 3a contribution may still be worthwhile if:
- You are required to file a tax return. For example, if your annual income is over CHF 120,000.
- You apply for a voluntary tax return. If you earn less than CHF 120,000, you can apply for a Subsequent Ordinary Assessment (Nachträgliche Ordentliche Veranlagung, or NOV) to claim deductions such as Pillar 3a.
Not sure whether you are required — or eligible — to file? Use our free B-Permit Calculator to check your canton, civil status, income and assets against the official thresholds in under a minute.
Pro Tip: Requesting a voluntary tax assessment (NOV) is generally only worth it if your local municipal tax rate is lower than the average withholding tax rate. Keep in mind that the deadline to apply for a voluntary tax assessment is strictly March 31st of the following year.
What if you contribute without filing a tax return?
If you contribute to Pillar 3a but do not file a tax return:
- You cannot deduct your contributions from your taxable income.
- When you withdraw the money later, you may still have to pay withdrawal tax on the full amount.
This means you miss the main tax benefit of Pillar 3a while still paying tax when you withdraw the funds. That is why it is important to use a Swiss Tax Calculator to check whether filing a tax return makes sense before contributing.
Still unsure? We are here to help
At FIN, we offer a personalised assessment to determine whether filing a tax return, applying for NOV or contributing to Pillar 3a make financial sense for your situation.