Directors of a company wishing to change their sole proprietorship into a corporation are not required to pay back funds drawn from their pension fund.
Entrepreneurs who have drawn funds from their pension fund may transform their sole proprietorship or their limited or general partnership into a corporation or SARL (limited liability company; an association of individual contributing the company’s capital together, with a minimum of CHF 20,000 and a maximum of CHF 2 million; partners are liable up to their initial contribution and their name is published in the trade register) without any obligation of repayment.
Company directors, who then have employee status, should sign up with the insurance provider of their own company (pension fund under the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans, LPP) and rebuild their pension capital. Early payment out of the pension fund does not have to be repaid to their own company’s pension provider.
If the plan is to transform a sole proprietorship or a general or limited partnership into a corporation after a cash withdrawal from the 2nd pillar pension (occupational pension) as a result of becoming self-employed, entrepreneurs are advised to confirm the tax consequences with the competent cantonal authorities. In the event of any cash withdrawal from the 2nd pillar pension after becoming self-employed, the authorities will verify that this is actually self-employment. Withdrawals without legal grounds are, in principle, taxed normally (see Judgment 2C_156/2010 of the Federal Court of June 7, 2011, Recital 4).
