Pillar 3b

Case 1: Life annuity insurance - periodic benefits 

1.1 Facts of the case

In 2023, X took out life annuity insurance with a life insurance company based in Switzerland. The life annuity insurance contract is subject to the VVG.

In 2025, X will receive the following pension benefits from this insurance:

• Contractually guaranteed pension CHF 20,000
• Guaranteed bonus pension CHF 10,000
• Surplus pension CHF 5,000

Note: The guaranteed bonus pension was financed from surpluses.

The surrender value of the life annuity insurance amounts to CHF 220,000 as at 31.12.2025.

1.2 Questions

1. How are benefits from life annuity insurance treated for income tax purposes?
2. Is life annuity insurance subject to wealth tax?

Case 2: Life annuity insurance - surrender Example I

2.1 The facts of the case

In 2018, at the age of 58, Y took out life annuity insurance with a life insurance company based in Switzerland. The life annuity insurance contract is subject to the VVG.

The first annuity is due on 01.02.2027. In 2025, Y decides to terminate the life annuity insurance and declares the surrender to the insurance company.

Y receives the redemption amount of CHF 350,000. This is made up as follows:

• Benefit from contractually guaranteed pension component CHF 200,000
• Benefit from bonus pension component CHF 100,000
• Benefit from surplus shares CHF 50,000

Note: The bonus pension was financed from surpluses.

2.2 Question

How is the buyback treated for tax purposes?

Case 3: Life annuity insurance - surrender Example II

3.1 Facts of the case

In 2018, at the age of 48, Y took out life annuity insurance with a life insurance company based in Switzerland. The life annuity insurance contract is subject to the VVG.

The first annuity is due on 1.2.2027. In 2025, Y decides to terminate the life annuity insurance and declares the surrender to the insurance company. 

Y receives a buyback sum of CHF 350,000. This is made up as follows:

Benefit from contractually guaranteed pension component CHF 200,000

Benefit from bonus pension component CHF 100,000

Benefit from surplus shares CHF 50,000

Note: The bonus pension was financed from surpluses.

3.2 Question

How is the buyback treated for tax purposes?

Case 4: Life annuity insurance - premium refund in the event of death

4.1 Facts of the case

In 2010, person Z, resident in the canton of Aargau, took out life annuity insurance with a life insurance company domiciled in Switzerland. The life annuity insurance contract is subject to the VVG. Z is both the policyholder (contracting party) and the insured person (subject of the contract).

The pension has been running since 1.1.2015. Z dies in 2025.

The contract ends with the death of Z. At the same time, due to the occurrence of the feared event "death", the benefit "premium refund in the event of death" (abbreviated to "premium refund") in the amount of CHF 350,000 becomes due. 

In simple economic terms, the "return of premiums on death" essentially consists of the unused premiums.

The daughter of Z, resident in Zurich, and the niece, resident in St. Gallen, are equal beneficiaries of the restitution amount.

The total repayment amount of CHF 350,000 is made up as follows:

• Benefit from contractually guaranteed pension component CHF 200,000
• Benefit from bonus pension component CHF 100,000
• Benefit from surplus shares CHF 50,000

Note: The bonus pension was financed from surpluses.

4.2 Question 

How is the return of premiums in the event of death treated for tax purposes for both beneficiaries?

Case 5: Life annuity insurance - special case annuity on two lives

5.1 Facts of the case

Ms. U lives in the canton of Zurich. In 2010, she took out life annuity insurance with an insurance company based in Switzerland. The life annuity insurance contract is subject to the VVG.

U is the policyholder and insured person. In addition to her life, the life of her partner is also insured. If one of the two insured persons dies, the pension continues in full until the death of the second insured person.

A premium refund in the event of death is not due on the death of the first insured person.

On 1.1.2025, U dies. According to the last will and testament, the policyholder status of the life annuity insurance is transferred to the life partner. The partner is 60 years old at the time of U's death.

The following pension benefits will result from the life annuity insurance in 2025: 

• Contractually guaranteed pension CHF 20,000
• Bonus pension CHF 10,000
• Surplus pension CHF 5,000

Note: The bonus pension was financed from surpluses.

5.2 Question

What are the tax consequences for the partner?

Case 6: Life annuity insurance - AHV contributions for non-employed persons

6.1 Facts of the case

Mr. K is widowed and has taken out temporary life annuity insurance. The annual guaranteed pension amounts to CHF 24,000; the insurance contract has no surrender value (temporary life annuity insurance without premium refund in the event of death).

Mr. K is 62 years old and no longer gainfully employed. He is subject to the AHV contribution obligation for non-employed persons (Art. 10 ff. AHVG). In addition to the temporary life annuity insurance, Mr. K still has assets of CHF 300,000 (cash and securities).

6.2 Questions

1. What factors are included in the AHV assessment basis and what AHV contribution does this result in?
2. What factors are included in the AHV assessment basis and what AHV contribution results if the life annuity contract has a surrender value of CHF 150,000?

Case 7: Capitalization transaction

7.1 Facts of the case

B has concluded a so-called capitalization transaction with an insurance company domiciled in Switzerland. The premium amounts to CHF 500,000 and the contract concluded is a unit-linked capitalization transaction. 

B receives an annual guaranteed benefit of CHF 27,000 for 20 years.

7.2 Questions

1. How is the capitalization transaction treated for income and withholding tax purposes?
2. B can prove that the payment of CHF 27,000 in 2025 includes a capital gain of CHF 1,000. Does this change the tax treatment?

Case 8: Disability pension 

8.1 Facts of the case

Person C is an employee of X AG and earns an annual salary of CHF 80,000. The employer, X AG, has made a contractual commitment to its employees to pay 80% of their salary for 24 months in the event of disability. X AG has reinsured this obligation with an insurance company. 

C has also taken out private disability insurance for himself with an insurer. In the event of disability, he receives a pension of CHF 48,000 after a 24-month waiting period.

At the beginning of 2025, C becomes incapacitated for work and receives 80% of his salary for 2 years, i.e. CHF 64,000 per year. As the incapacity for work continues, C will receive a disability pension of CHF 48,000 from the private insurance policy from the beginning of 2027.

8.2 Questions

1. How will the benefits for the years 2025 to 2026 be treated for income tax purposes?
2. How will the benefits be treated for income tax purposes from 2027?

Case 9: Surrenderable endowment insurance - periodic premium 

9.1 Facts of the case

In 2020, Ms. R took out a surrenderable endowment insurance policy with periodic premium payments and a term of 10 years. A benefit of CHF 108,000 is insured in the event of both survival and death.

9.2 Questions

1. How is the insurance to be taxed during the term (before a claim occurs)?
2. R receives the guaranteed benefit of CHF 108,000 plus surpluses of CHF 3,000 when the insurance expires in 2030. How is this endowment benefit taxed?
3. R dies in 2025 and the death benefit of CHF 108,000 plus surpluses of CHF 2,000 is paid out to her spouse. How is the death benefit taxed for the spouse?

Case 10: Surrenderable endowment insurance - single premium

10.1 Facts of the case

In 2010, at the age of 41, F takes out a single-premium insurance policy for CHF 100,000. The term of the insurance contract is 20 years. The guaranteed survival benefit is CHF 155,000 and the guaranteed death benefit is also CHF 155,000.

10.2 Questions

1. How is the insurance to be taxed during the term (before a claim occurs)?
2. How is the endowment benefit of CHF 155,000 plus surpluses of CHF 12,000 to be taxed in 2030?
3. F dies in 2025 and the death benefit of CHF 155,000 plus surpluses of CHF 10,000 are paid out to his partner. How is the death benefit taxed?
4. F does not die in 2025 and instead buys back the insurance in that year. The surrender value is CHF 130,000 plus surpluses of CHF 5,000. How is the surrender taxed?
5. F only makes a partial repurchase of CHF 81,000 in 2025. The repurchase value is CHF 135,000.
6. In 2028, F makes a further partial redemption in the amount of 35,200, with a redemption value of CHF 64,000. 
7. How are the two partial buybacks taxed?

Case 11: Pure death risk insurance 

11.1 Facts of the case

Mr. G takes out a death benefit insurance policy in 2020 with an annual premium of CHF 2,000. If G dies within these 20 years, the beneficiary receives a death benefit of CHF 300,000.

However, if G reaches the end of the term in 2040, the insurance expires without any benefits becoming due.

The insurance is therefore not surrenderable, as the occurrence of the insured event is not certain.

11.2 Questions

1. G dies after 18 years and his beneficiary wife receives a death benefit of CHF 300,000. How is the benefit taxed for the wife?
2. Does anything change for tax purposes if G's partner is a beneficiary instead of his wife?

Case 12: Pure death risk insurance - mortgage protection

12.1 Facts of the case

In 2020, Ms. P takes out term life insurance with an annual premium of CHF 2,000 and a death benefit of CHF 300,000. The term of the insurance is 20 years.

The insurance serves to secure a mortgage in the same amount that P has taken out with her bank. The claim to the death benefit from the insurance is pledged to the bank.

If P dies during the 20-year term, the bank as pledgee receives the death benefit of CHF 300,000. 

According to the insurance policy, the beneficiary is P's husband, who also inherits the property on her death.

12.2 Questions

1. P dies after 15 years and the death benefit of CHF 300,000 is paid out to the bank. What are the tax consequences of this?
2. In addition to the guaranteed death benefit of CHF 300,000, surpluses of CHF 20,000 are due. These are paid out to the beneficiary, i.e. P's husband. What are the tax consequences with regard to this CHF 20,000?

Case 13: Excess death benefit 

13.1 Facts of the case

Mrs. B takes out the following surrenderable endowment insurance:

Premium per year CHF 6,000

Term of the contract 10 years

Guaranteed endowment benefit CHF 60,000

Guaranteed death benefit CHF 180,000

The death benefit is therefore three times as high as the endowment benefit.

B dies after 3 years and the beneficiary husband receives the death benefit of CHF 180,000.

13.2 Question

How is Mr. B's death benefit taxed?

Case 14: Business insurance - credit insurance sole proprietorship

14.1 Facts of the case

A sole proprietorship has taken out a business loan in the amount of CHF 500,000. To secure the loan, a death risk insurance policy is taken out for the same amount. 

The contract roles are defined as follows:

Policyholder: Sole proprietorship 

Insured person: Company owner / self-employed person

Premium payer: Sole proprietorship

Beneficiary in the event of death Wife of the owner / self-employed (is also sole heir)

Assignment of insurance benefit to lending bank

14.2 Questions

1. How is the insurance treated for tax purposes during the term?
2. What are the tax consequences in the event of the death of the company owner?

Case 15: Business insurance - key person insurance 

15.1 Facts of the case

A public limited company wants to protect itself in the event that an important employee for the company is absent.

For this purpose, the company takes out the following death risk insurance:

Policyholder: stock corporation

Insured person: Employees of the stock corporation

Premium payer: public limited company

Beneficiaries in the event of death Public limited company

The beneficiary of the company is not necessary in itself, as it is entitled to the insurance benefit anyway as the policyholder.

15.2 Question

What are the tax consequences during the term of the insurance and in the event of the death of the employee (insured person)?

15.3 Facts - Variant

The owner of the limited company has the idea of taking out a life insurance policy on his wife's life through his company. He hopes to gain tax advantages from this.

For this purpose, the company (formally) takes out the following death risk insurance:

Policyholder: stock corporation

Insured person: owner of the stock corporation

Premium payer: public limited company

Beneficiary in the event of death Wife of the owner

15.4 Question

What are the tax consequences during the term of the insurance and in the event of the death of the owner (insured person)?

Case 16: Stamp duty on periodic premiums 

16.1 Facts of the case

T takes out a periodically financed surrenderable endowment insurance policy with a term of 10 years in 2022. The annual premium amounts to CHF 3,000. 

16.2 Questions

1. After three years, T would like to increase the premium to CHF 4,000. How should the situation be assessed with regard to stamp duty on insurance premiums?
2. T only applies for the premium increase after 7 years. What about the stamp duty in this case?
3. T applies for the premium increase after 3 years, as in the first question, but reduces the premium again to CHF 3,000 after a further 3 years. How is the case to be assessed for stamp duty purposes?
4. In contrast to the previous question, T only applies for a premium increase for 3 years to CHF 4,000 after 3 years from the start. Is there a difference in terms of stamp duty compared to the previous question?