Taxation of lump-sum payments from the redemption of annuity insurance policies within the framework of unbound self-provision (Pillar 3b)

Facts

A.G., born in 1942, had concluded share rights and annuity contracts with two Dutch companies. In the context of the 2004 tax assessment, the tax administration of the Canton of Graubünden qualified the annuity payments as well as the lump-sum payments from the redemption of the contracts as income from annuities and taxed them together with the remaining income at 40 percent. The appellants were of the opinion that these were capital benefits from pension provision, which should be taxed separately from the remaining income at one-fifth of the ordinary rate.

Considerations

The Federal Court decided that the lump-sum payments from annuities are to be taxed separately from the remaining income at one-fifth of the ordinary rate in accordance with Art. 38 DBG. The wording of Art. 38 DBG is clear and expressly covers "lump-sum payments under Article 22 DBG", which also includes lump-sum payments from annuity insurance policies. There is no reason to deviate from the clear wording.

However, the ongoing annuity payments from P. Holding B.V. are to be taxed at 40 percent together with the…