The question is central since 80% of people make a 3th Pillar A or B to take advantage of the tax rules introduced by the Confederation.
The tax savings generated by implementing such solutions generate a guaranteed and secure return that has no equal in the market.
Tax cuts with the 3th Pillar A
The strength of 3th Pillar A lies in the fact that the premium invested is deductible from taxable income.
The economy is therefore the difference in tax with your taxable income before and after this deduction.
On average, the tax gain is around 30% of the amount invested. This means an average tax savings of CHF 2,064.- for the maximum amount of CHF 7,056.- per year for an employee. This gain can reach up to around 42% of the premium invested, or CHF 2,890.- in annual savings. There is a tax on final capital, but it is much lower than the savings made from year to year.
Another advantage is that the accumulated capital does not enter into your taxable assets. The economy will essentially depend on your wealth. It quickly amounts to several thousand francs over the duration of your investment.
Last point, the income generated in this type of solution is not taxable on income. For example, dividends, bond coupons,..., will not increase your income tax burden.
Tax cuts with the 3th Pillar B
The 3th Pillar B does not benefit from the same tax advantages as the 3th Pillar A. However, 2 cantons, Fribourg and Geneva, benefit from a deduction of the amount invested from taxable income almost like 3th pillar A (cantonal and communal tax, but not federal).
However, these deductions are more limited. An employee is entitled to a deduction of CHF 750.- if he is single and CHF 1500.- if he is in a relationship in Fribourg. These amounts amount to CHF 2200.- for single employees in Geneva and CHF 3300.- for couples and CHF 900.- per child under 18.
There is no tax on capital at maturity, the capital is taxed from year to year in your taxable assets.
The income generated in this type of solution is also not taxable on income.
Conclusion
Set up a 3th Pillar A or B brings a strong tax advantage. The discounts obtained generate a guaranteed return with each passing year. This is a wish of the government and these benefits will increase according to the current discussions in Parliament.
