Tax consequences of a WEF advance withdrawal and its repayment

Tax consequences of a WEF advance withdrawal and its repayment

The WEF advance withdrawal (promotion of home ownership) allows insured persons to withdraw part of their pension fund assets for the purchase of residential property for their own use. The amount withdrawn is taxed as a lump sum at a privileged pension rate, irrespective of the remaining income.  

Repayment of the WEF advance withdrawal

Anyone who has made a WEF advance withdrawal can pay it back into the pension fund voluntarily or must do so when certain events occur, such as the sale of the property. In addition, the WEF advance withdrawal must be repaid before a purchase can be made into the pension fund. Repayment is possible until the regular entitlement to retirement benefits arises, until another insured event occurs or until the vested benefits are paid out in cash.

Although the repayment of the WEF advance withdrawal to the pension fund is not deductible for income tax purposes, the taxes originally paid on the WEF advance withdrawal can be reclaimed without interest. In order to apply for a tax reclaim, the repayment of the WEF advance withdrawal must be documented by means of an account statement from the FTA (the FTA keeps a register of advance withdrawals and repayments). In addition, the income tax paid on the WEF advance withdrawal must be proven with the corresponding tax invoices, some of which were paid years ago.  

It is worth looking into the conditions and consequences of a WEF advance withdrawal and the repayment options at an early stage.

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