Retirement savings and property acquisition

The taxpayers had used CHF 950,000 (their vested benefits) to acquire their home. As they had withdrawn part of their pension fund savings, they had paid tax on the capital benefit. Two years later, the taxpayers partially (CHF 250,000) reconstituted their pension fund savings. The tax authorities revised the initial taxation (based on CHF 950,000) on the withdrawal benefit by deducting the repayment (i.e., CHF 700,000). The balance in favour of the taxpayer was paid to them (the OEPL specifies ’without interest’ - Art. 14 para. 2).

The tax office has made a proportional refund. As the taxpayers reinstated 5/19 of the EPL, 5/19 of the tax on the EPL is refunded. The taxpayers requested a refund taking into account the progression of the tax (from the CHF 700,000 to CHF 900,000 bracket).

Federal judges hold that the law is silent on this point. They conclude from this that the cantons have complete latitude, provided that constitutional principles are not violated (equal treatment, taxation according to ability to pay, prohibition of arbitrariness, principle of good faith). As the constitutional principles are respected, the federal judges validate the proportional method.

The judgment is in German. It is a Zurich case.

TF, judgement 9C_344/2024, of 19 March 2025