U.S. TAXATION OF SWISS RETIREMENT AND PENSION FUNDS

Milan K. Patel, J.D., LL.M. (Taxation)Anaford AG

23 September 2013

Swiss Social Security System

• Pillar I – Compulsory for everyone– Old-age and survivors’ insurance (AVS)– Invalidity insurance (AI)

• Pillar II – Compulsory for salaried persons– Occupational benefit plan (PP)

• Pillar III – Voluntary basis– Individual provident measures

U.S. Foreign Tax Credit

I.R.C. § 901(b)(1): “the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country ….”

U.S. – FTC Computation

General

Deferred Compensation – 409A

• Qualified Employer Plans– 401(k)– Individual Retirement Accounts (IRAs)

• Nonqualified Deferred Compensation Plan

U.S. – FTC Computation

With Pillar II

Relief???

• Bilateral Agreements– Income Tax Treaty– Totalization Agreement

• Certain Foreign Plans– Treas. Reg. § 1.409A-1(a)(3)(iv)

Bilateral Agreements

• U.S. – Swiss Income Tax Treaty (1 Jan 1998)– Article 18 (Pensions and Annuities)– Article 19 (Government Service and Social

Security)

• U.S. – Swiss Totalization Agreement (1 Nov 1980)– Old-age, survivors, and invalidity covered– Unemployment, occupational benefit plans, and

social welfare not covered

Certain Foreign Plans

• Treas. Reg. § 1.409A-1(a)(3)(iv): “In addition, the term nonqualified deferred compensation plan does not include a social security system of a foreign jurisdiction to the extent that benefits are provided under or contributions are made to a government-mandated plan as part of that foreign jurisdiction’s social security system.”

Anaford AGTödistrasse 53

CH-8002 Zürich – Switzerland+41 44 567 8805 | Main

Milan K. Patelmilan.patel@anaford.ch+41 44 567 8808 | Direct

Disclaimer

This Presentation is intended solely for information purposes. The opinions contained in this Presentation may be altered at any time. The information

published in this presentation constitutes neither a request nor an offer or recommendation to buy or sell investment instruments or to perform other

transactions or services.

Although Anaford AG has taken all reasonable care to ensure that the information contained in this presentation is accurate at the time of publication, the

details in this presentation do not represent decision-making aids for legal, fiscal or other advice-related questions. Before setting up or making use of any

structure, you should therefore consider the suitability of the transaction to your particular circumstances and independently review (with your professional

advisers as necessary) the specific financial risks as well as the tax, legal, regulatory, credit and accounting implications.

Anaford AG would be pleased to provide you with any legal and tax advice on the matters contained herein upon your express kind request.

© 2013, Anaford AG, Switzerland. All rights reserved.