Maximum deductions for the third pillar increased from 2019

The Federal Tax Administration (ESTV) announced in its circular No. 164 dated October 18, 2018, the interest rates in the area of direct federal tax for the calendar year 2019 as well as the maximum deductions for Pillar 3a in the tax year 2019. The interest rates remain unchanged, however, more can be paid into the third pillar and deducted from income in 2019.

Interest rates for direct federal tax remain the same

‍Since the current interest rate situation is historically low, the ESTV has also decided to keep the interest rates for direct federal tax at the same level for the calendar year 2019. The compensation interest rate for prematurely paid amounts is again 0%. And the default and refund interest rate also remains at 3%. An increase in the compensation interest rate is only to be expected when the interest rates recover.

‍Maximum deductions for the third pillar are increased for 2019

‍In the area of provision, the Federal Council has adjusted the limit amounts of the occupational provision. The upper limit amount was increased from 84'600 Fr. to 85’320 Fr. According to Art. 7 Para. 1 of the Ordinance on tax deductibility for contributions to recognized forms of provision (BVV3), employees who are members of a pension fund can deduct a maximum of 8% of this amount in the third pillar from their income. Self-employed persons who are not members of a pension fund can deduct up to 20% of their annual earned income, but no more than 40% of the upper limit amount, which is now 85’320 Fr. Thus, employees can now pay up to 6826 Fr. into Pillar 3a and deduct it from their income in 2019, and self-employed persons not belonging to any pension fund up to 34'128 Fr.‍

Previously it was 6768 Fr., or 33‘840 Fr. The new limit is effective from January 1, 2019.‍

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