Capital Withdrawal Tax: Why Where You Live Decides

In brief: On a capital benefit of CHF 500,000, a single person in tax year 2026 pays CHF 25,701 in Appenzell and CHF 49,543 in Herisau. The federal share is identical in both cases. The entire difference comes from canton and municipality. What counts is your residence at the time the benefit falls due, not at year-end.

Anyone drawing pension fund savings or Pillar 3a capital tends to think in terms of the amount shown on the statement. The tax bill comes later, and it varies sharply depending on where you live. Two cantonal capitals just 20 kilometres apart differ by around CHF 23,800 on half a million.

The capital withdrawal tax is a one-off tax on capital benefits from pension provision. It is levied separately from other income and is always subject to a full annual tax rate (Art. 11 para. 3 StHG). The federal government, the canton, and the municipality each apply their own rate. The federal government calculates its share under Art. 38 para. 2 DBG at one-fifth of the ordinary income tariff.

The key points at a glance

• Federal share on CHF 500,000 in tax year 2026: CHF 10,501, identical in every canton (source: ESTV tax calculator).
• Cantonal and municipal share on the same amount: CHF 15,200 in Appenzell, CHF 39,042 in Herisau (source: ESTV tax calculator, tax year 2026).
• Total burden on CHF 1,000,000: 5.34 percent in Appenzell, 11.14 percent in Herisau (source: ESTV tax calculator, tax year 2026).
• Decisive date: residence at the time the benefit falls due (Art. 4b para. 1 StHG).
• Maximum burden from direct federal tax: 2.3 percent (source: ESTV fact sheet “Taxation of capital benefits from pension provision”, 25.06.2025).

All figures apply to a single, non-religious person aged 65, queried on 02.09.2026 from the Federal Tax Administration’s tax calculator. The tax burden also depends on marital status, religious affiliation, and any other withdrawals in the same year.

Why does the tax differ by place of residence?

Because three levels tax independently of one another. The federal government applies the same rate across all of Switzerland. Cantons and municipalities set their own rates, and that is exactly where the difference arises. On CHF 500,000, the federal share is CHF 10,501 everywhere, while canton and municipality together demand between CHF 15,200 and CHF 39,042.

The second reason is progression. Cantonal tariffs rise at different rates, which is why the ranking shifts with the size of the benefit. At CHF 250,000, the city of Zurich charges CHF 14,601, below Bern’s CHF 16,323. At CHF 1,000,000, the picture reverses: Zurich charges CHF 109,542, Bern CHF 96,154. A ranking of cantons without a stated amount is therefore worth little.

Total burden from federal, cantonal, and municipal tax, tax year 2026, single, no religious affiliation, age 65 (source: ESTV tax calculator, queried 02.09.2026).

The municipality accounts for more than many people expect. Within the canton of Zurich, the cantonal tax on CHF 500,000 is the same everywhere, at CHF 10,906. The municipal tax across the Zurich municipalities checked ranges from CHF 8,380 to CHF 14,350. Anyone who looks only at the canton and ignores the municipality underestimates the spread.

What does the withdrawal cost in your canton?

The four locations above show the range. The table below lists all 26 cantonal capitals, again for a withdrawal of CHF 500,000 by a single, non-religious person aged 65.

Queried again on 07.09.2026 using the ESTV tax calculator, for the complete overview. The federal share is CHF 10,501 in tax year 2026 and CHF 10,503 in tax year 2025. For Geneva, St. Gallen and Ticino the Federal Tax Administration has not yet published the 2026 rates, so the last published figure, that for 2025, is shown.

Which date decides?

Your tax residence at the time the benefit falls due. This is an explicit exception: normally, if you move within Switzerland, your residence at the end of the tax period applies. For capital benefits from pension provision, Art. 4b para. 1 StHG states that the canton where the person lives when the benefit falls due is the one that taxes it.

A tax domicile requires that you reside in the canton with the intention of staying permanently (Art. 3 para. 2 StHG). Merely registering an address without moving the centre of your life is not enough.

In practice this means two things. A move after the due date no longer changes the tax bill, even if it happens within the same year. And what counts is the due date, not the day the money arrives in your account. The due date follows from the pension fund’s regulations and the date on which the withdrawal was registered.

Anyone planning a move who is also close to drawing their pension fund is dealing with two dates that affect each other. A tax advisor should check this before the withdrawal is registered, because the sequence cannot be corrected afterwards.

What applies if you live abroad?

Then no ordinary capital withdrawal tax applies, but a source tax instead. Under Art. 35 para. 1 let. g StHG, recipients living abroad who receive benefits from Swiss private-law occupational pension institutions or from Pillar 3a are subject to source tax. It is levied at the seat of the pension institution.

The rate therefore depends on the canton where the pension fund or vested benefits foundation is registered, not on your last Swiss place of residence. Whether and to what extent the source tax can be reclaimed depends on the double taxation agreement with the new country of residence. In many cases, the country of residence also taxes the benefit in addition. This situation needs to be clarified before you move abroad.

What other levers are there besides place of residence?

Three, and none of them is moving house. First, staggering: because the tariff is progressive, several smaller withdrawals spread across different tax years are taxed more lightly overall than a single large one. Withdrawals made in the same year are added together by the tax authorities.

Second, coordination within a marriage. Under current law, capital benefits paid to spouses are added together, which increases the progression if both draw benefits in the same year. Third, the interplay with other pension withdrawals: anyone who draws pension fund capital and several Pillar 3a accounts in the same year ends up in a higher tariff bracket than with a withdrawal spread over several years.

How much these levers are worth in an individual case depends on place of residence, the amount, and the timing of retirement. Tax treatment can also change; for the specific calculation, a tax advisor is the right point of contact. We cover the basics of the decision between a lump sum and a lifelong pension separately in Lump Sum or Pension, and the terminology around this taxation is explained in the glossary entry on the capital withdrawal tax.

Frequently asked questions about taxation of the capital withdrawal

Which canton taxes my capital withdrawal?

What counts is the canton where you have your tax residence at the time the benefit falls due (Art. 4b para. 1 StHG). This is the exception to the usual rule, under which residence at the end of the tax period applies. A move after the benefit falls due no longer changes the taxation.

How big is the difference between cantons?

For a capital benefit of CHF 500,000, the cantonal capitals range in tax year 2026 from CHF 25,701 in Appenzell to CHF 49,543 in Herisau, a difference of roughly CHF 23,800 over a driving distance of about 20 kilometres (source: ESTV tax calculator, queried 02.09.2026, single, no religious affiliation, age 65).

Does my place of work or the pension fund’s registered seat count?

Neither. As long as you live in Switzerland, your canton of residence taxes the benefit. The pension fund’s registered seat only becomes relevant if you live abroad at the time the benefit falls due: in that case, the canton where the fund is registered levies a source tax (Art. 35 para. 1 let. g StHG).

Is a low-tax canton always the cheaper choice at every amount?

No. The ranking shifts with the size of the benefit, because cantonal tariffs are progressive to different degrees. At CHF 250,000, the city of Zurich comes in below Bern; at CHF 1,000,000, it comes in above (source: ESTV tax calculator, tax year 2026). A general ranking of cantons without a stated amount says little on its own.

Is the capital withdrawal tax about to increase?

The Federal Council had proposed a higher federal tax on capital withdrawals as part of the Relief Package 27. Parliament struck the measure in March 2026. Capital benefits continue to be taxed separately at one-fifth of the ordinary rate under Art. 38 para. 2 DBG.

Status: September 2026. Sources: ESTV tax calculator (queried 02.09.2026 and 07.09.2026), ESTV fact sheet “Taxation of capital benefits from pension provision” of 25.06.2025, StHG (SR 642.14), DBG (SR 642.11).