Swiss Pension Lump Sums: No Refund for UAE Residents
What this means for clients
Many Swiss nationals moving to the UAE plan to withdraw their Pillar 2 and Pillar 3a savings as a lump sum after leaving Switzerland, expecting the payment to be tax-free because the UAE levies no personal income tax. That expectation is wrong. Swiss withholding tax applies to the payment and, for UAE residents, it cannot be reclaimed.
Who and what is affected
The issue concerns anyone who has built up Swiss pension savings and now lives in the UAE, whether Swiss nationals or foreign nationals who previously worked in Switzerland. It covers occupational pension assets (Pillar 2), including vested benefits accounts held after leaving an employer, and tied private pension savings (Pillar 3a).
When the money can be withdrawn
A person who leaves Switzerland permanently for a country outside the EU and EFTA, such as the UAE, can generally withdraw the full Pillar 2 balance in cash, including the mandatory portion. Pillar 3a savings can also be withdrawn on permanent departure. The pension institution will usually ask for proof of deregistration from the Swiss municipality.
Withholding tax at source
When a Swiss pension fund, vested benefits foundation or Pillar 3a provider pays a capital benefit to a person resident abroad, it deducts Swiss withholding tax before paying out. The tax is levied on the gross amount, and each capital benefit is taxed separately. The applicable rates are those of the canton in which the paying institution has its seat.
No refund for UAE residents
Residents of many treaty countries can reclaim this tax within three years of the payment, by showing that the tax authority of their new country of residence is aware of it. UAE residents cannot. The Swiss Federal Tax Administration and the cantonal tax authorities list the UAE as a country without a refund right for capital benefits from pension schemes. The withholding tax is therefore the final tax on the lump sum.
Not new, but often overlooked
This position follows from the 2011 double taxation agreement between Switzerland and the UAE and has applied for years. The amending protocol that applies from 1 January 2026 did not change it. The protocol adds an anti-abuse clause, under which treaty benefits can be denied where obtaining them was one of the principal purposes of an arrangement.
Points to consider before leaving Switzerland
Where the assets sit: because the canton of the paying institution determines the rate, where vested benefits are held at the time of withdrawal can affect the tax due.
Splitting and timing: as each capital benefit is taxed separately, the number of accounts and the year of each withdrawal can matter.
Before or after departure: whether the payment is made while still resident in Switzerland or after the move determines how it is taxed.
Leaving the assets in Switzerland: vested benefits can remain invested until a later date, but the tax treatment is determined by the place of residence when the payment is eventually made.
The wider plan: residency, any company structure and succession planning in the UAE should be considered together with the pension.
Practical checklist
Map your accounts: obtain current statements for every Pillar 2, vested benefits and Pillar 3a account, including older accounts from previous employers.
Check the paying institutions: note the canton in which each institution has its seat and the withholding rates that apply there.
Set the sequence: decide the order and timing of withdrawals before deregistering in Switzerland.
Keep the paperwork: retain payout statements and withholding tax certificates for your records.
Our view
This issue is best addressed before the move, while the options are still open. Swiss Group works between Switzerland and the UAE and can review your position, coordinate with Swiss tax advisers and align your pension planning with your UAE setup. Please contact us to discuss your position.
