1. Receiving the Swiss Pension (AHV):
Swiss retirees living abroad can receive their AHV/AVS pension payments into either a Swiss bank account or an overseas account, including Malaysia. However, there can be currency conversion and transfer fees if paid abroad.
2. Tax Residency and Where You Pay Taxes:
If someone is a tax resident in Malaysia (typically by spending more than 183 days a year there), Malaysia taxes them on their Malaysian-sourced income only, not foreign-sourced income (including pensions), unless that income is remitted into Malaysia—and even then, under current rules (as of 2024-2025), foreign-source income remitted may still be tax-exempt or lightly taxed under transitional arrangements.
So:
If the pension is kept abroad, it may not be taxed at all in Malaysia.
If brought into Malaysia, taxation may apply, depending on recent rulings, so it's worth getting up-to-date advice.
3. Swiss Withholding Tax (Quellensteuer):
Switzerland usually deducts a source tax on pensions paid abroad. For Swiss nationals or foreigners who have contributed to AHV, the withholding tax rate is typically 11.22%.
But! There is a Double Taxation Agreement (DTA) between Switzerland and Malaysia, and under this:
Swiss pensions may not be taxed in Switzerland if the person is a Malaysian tax resident.
The pensioner can usually apply for a refund of Swiss Quellensteuer via Swiss tax authorities—this requires submitting forms (e.g. Form 85 or 86) with proof of Malaysian tax residency.
4. Do You Need to Provide Evidence Between Countries?
Yes, if someone is reclaiming the Swiss tax (Quellensteuer), they'll need:
Proof of Malaysian tax residency (like a tax residence certificate or official letter from LHDN).
Sometimes proof of where the pension is being paid and bank statements. Malaysia and Switzerland don’t have automatic exchange of information for pensions, but providing accurate documentation is key.
5. Is AHV taxed differently?
AHV (basic state pension) is treated like any other pension income. In Switzerland, it's generally subject to withholding tax when paid abroad, unless reclaimed under a DTA. Malaysia doesn’t distinguish it from other pensions unless it’s being remitted and taxed as part of foreign income.
Tips for the person posting:
They should talk to a Malaysian tax consultant familiar with expat taxation.
They can apply for Quellensteuer reimbursement annually, but it can take time.
Consider whether they need to remit the pension to Malaysia—if not, it might be best left abroad to avoid confusion.
