US taxation of Swiss Retirement and Swiss Pension Funds. BVG, 2nd Pillar

1. U.S. TAXATION OF SWISS
RETIREMENT AND PENSION FUNDS
Matthew Ledvina, J.D., LL.M. (Taxation)
Anaford

2. Swiss Social Security System
• Pillar I – Compulsory for everyone
– Old-age and survivors’ insurance (AVS)
– Invalidity insurance (AI)
• Pillar II – Compulsory for salaried persons
– Occupational benefit plan (PP)
• Pillar III – Voluntary basis
– Individual provident measures

3. U.S. Foreign Tax Credit
I.R.C. § 901(b)(1): “the amount of any income, war
profits, and excess profits taxes paid or accrued
during the taxable year to any foreign country ….”

4. U.S. – FTC Computation
General

5. Deferred Compensation – 409A
• Qualified Employer Plans
– 401(k)
– Individual Retirement Accounts (IRAs)
• Nonqualified Deferred Compensation Plan

6. U.S. – FTC Computation
With Pillar II

7. Relief???
• Bilateral Agreements
– Income Tax Treaty
– Totalization Agreement
• Certain Foreign Plans
– Treas. Reg. § 1.409A-1(a)(3)(iv)

8. Bilateral Agreements
• U.S. – Swiss Income Tax Treaty (1 Jan 1998)
– Article 18 (Pensions and Annuities)
– Article 19 (Government Service and Social
Security)
• U.S. – Swiss Totalization Agreement (1 Nov 1980)
– Old-age, survivors, and invalidity covered
– Unemployment, occupational benefit plans, and
social welfare not covered

9. Certain Foreign Plans
• Treas. Reg. § 1.409A-1(a)(3)(iv): “In addition, the
term nonqualified deferred compensation plan
does not include a social security system of a
foreign jurisdiction to the extent that benefits are
provided under or contributions are made to a
government-mandated plan as part of that
foreign jurisdiction’s social security system.”

10. Anaford AG
Tödistrasse 53
CH-8002 Zürich – Switzerland
+41 44 567 8805 | Main
Matthew Ledvina
matthew.ledvina@anaford.com

11. Disclaimer
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