Federal Council wants to make the taxation of life annuities more flexible

According to the Federal Council's press release of 24 November 2021, life annuities are taxed too highly in the current interest rate environment. Therefore, the Federal Council decided at its meeting on 24 November 2021 to flexibly adjust the taxation to the investment conditions.

In the case of life annuities, a share of 40 percent is taxed as a flat-rate income share, which results in overtaxation in the current interest rate environment. According to the Federal Council's proposal, the taxable income portion of life annuities is to be made more flexible. In future, for life annuity insurance, the taxable income portion of the guaranteed annuity benefit is to be calculated using a formula depending on FINMA's maximum interest rate. Any surplus benefits are to be taxable at 70%. In the case of life annuities and pledges, the taxable share of income is to be determined on the basis of the average yield of ten-year federal bonds.

The dispatch on the taxation of life annuities and similar forms of pension provision now goes to parliament.

Further information and documents are available here.