Financing self-employment in Switzerland with early withdrawals from pillar 3a and the pension fund

Self-employment has become a popular option for many people in Switzerland. It offers more flexibility, independence and the opportunity to make their own financial decisions. However, becoming self-employed requires sufficient funding, and for many people, early withdrawal from the pension fund and pillar 3a can be a valuable source of funding. In this blog, we go into the legal provisions and procedures for early withdrawals from pillar 3a and the pension fund in Switzerland and explain how they can be used to finance self-employment.

The importance of pillar 3a and pension funds in Switzerland

Pillar 3a and pension funds are two key components of the Swiss pension system that provide a financial safety net for older people. In addition, these funds can also be used to finance self-employment, making them an important source of funding for people who want to start their own business.

What is Pillar 3a?

Pillar 3a is a voluntary pension plan in Switzerland that offers tax advantages for contributors. Contributions to Pillar 3a are tax deductible up to a certain annual amount. In addition, the funds accumulated in Pillar 3a are tax-free until they are withdrawn, so there is no wealth tax.

What are pension funds?

Occupational pension provision, also known as pension fund or BVG, is a compulsory benefit for most employees. It supplements the AHV pension and helps to ensure a comfortable standard of living in old age. The employer is responsible for connecting employees to a pension fund and pays at least half of the monthly contributions deducted from the employee’s salary.

Eligibility requirements for early withdrawal from pillar 3a and the pension fund

The prerequisite for an early withdrawal from pillar 3a or a pension fund is that the person is self-employed and registered with the AHV. The person must work in their own name and at their own risk, which is only possible in the case of a sole proprietorship or partnership. If the person works for their own AG or GmbH, they are considered an employee and are not entitled to an early withdrawal.

Advantages and disadvantages of early withdrawal from pillar 3a and pension funds

The early withdrawal from pillar 3a and pension funds can be a valuable source of financing for self-employed persons. However, it is important to weigh up the advantages and disadvantages before making a decision. The advantages include access to a large lump sum, breaking the tax progression if a lump sum withdrawal is planned at retirement or provided for under the pension fund regulations, and the possibility of using the money for one’s own business. The disadvantages include a reduction in retirement provision, immediate taxation of the amount and, with some pension funds, benefits are also reduced in the event of death or disability.

What taxes are due on an early withdrawal?

An early withdrawal from pillar 3a is subject to immediate taxation. The pension provider (bank/insurance company) reports the early withdrawal to the Federal Tax Administration, which calculates and collects the tax via the communal or cantonal tax office.

In the case of restricted personal pension provision, the benefits are taxed differently; the assessment is made separately from the ordinary annual income tax or the withholding tax in the case of foreigners. This prevents the investment income from occupational pensions from bringing the regular annual income taxation into a higher progressive bracket.

Withdrawal of funds from Pillar 3a and the pension fund, what do I need to bear in mind?

In order to withdraw funds from Pillar 3a or a pension fund, one must complete the relevant forms and submit them to the respective institution. In addition, the person must prove his/her status as a self-employed person and the purpose for which the funds are to be used, usually with a confirmation from the AHV compensation fund. An advance withdrawal can only be made within one year of the start of self-employment.

It is important to seek professional advice before making a withdrawal, as there are tax and legal consequences to consider.

The experts at Nexova will be happy to advise you in this regard in a free initial consultation.

Is it possible to make an early withdrawal from the entire pension fund?

If you are not yet 50 years old, you can withdraw your pension assets. However, if you are 50 or older, you may only withdraw either half of your current balance or the maximum balance you could have withdrawn at age 50, whichever is greater.

Conversion of a sole proprietorship into a corporation: What happens to the BVG assets?

When a sole proprietorship is converted into a joint stock company or limited liability company, the occupational pension funds drawn do not have to be repaid. Entrepreneurs who have drawn BVG or Pillar 3a funds on their way to becoming self-employed can complete the transition without having to repay them. The establishment of a corporation and the early access to the pension assets can be achieved by setting up a sole proprietorship and subsequently converting it into an AG or GmbH, so that access to the assets is still possible and the advantages of a corporation can be used.


in summary, self-employment is a popular option in Switzerland, with early withdrawals from pillar 3a and the pension fund providing valuable funding. However, it is important to consider the eligibility requirements, restrictions and consequences, such as reduced pension benefits and taxation. It is recommended that professional advice be sought. Entrepreneurs who have drawn funds can convert to a limited company without having to repay funds.

Nexova AG offers competent advice on self-employment and early withdrawal. Our team will help you make informed decisions and clarify the tax and legal implications. Arrange a non-binding consultation appointment at any time to discuss your specific needs. Our goal is to help you make the most of your resources and achieve your business goals. Contact us for a personal consultation.

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