13th AVS Pension: Higher Deductions and VAT Planned (cross-border guide)

Di Valerie Linc · Published on

Clash over the financing of the 13th AVS pension. The Council of States' Commission rejects a temporary VAT hike, pushing for a mixed solution: higher salary contributions and increased VAT.

Contesto

TL;DR - AVS 13th pension needs 4.2B CHF from 2026 - Council of States prefers mixed financing - Impact on cross-border workers' payslips - VAT increase affects purchasing power in Ticino ## Key facts - Amount Needed: 4.2 billion francs starting in 2026 - Federal Council Proposal: 0.7 percentage point increase in VAT - National Council Proposal: Temporary VAT increase until 2030 - Council of States Plan: Mixed solution with salary and VAT increases - Current Employee Contribution: 5.3% for AVS/AI/IPG - Impact on Gross Salary: Increase in salary contributions reduces net salary - VAT Increase Impact: Higher costs for goods and services in Ticino - Decision Timeline: Uncertain due to political clashes between chambers No compromise on the financing of the 13th AVS pension. The Social Security and Health Commission of the Council of States has taken a firm stand, outlining a clear path that starkly contrasts with the other federal chambers. The core issue is how to cover the 4.2 billion francs needed starting in 2026 to pay out the additional monthly pension approved by the public on March 3rd. The Federal Council's proposal, a simple 0.7 percentage point increase in VAT, is not convincing. Even less convincing is the temporary fix proposed by the National Council in September, which envisioned a VAT increase limited until 2030. For the States' commission, these are solutions that offer no long-term prospects and merely "postpone the need for financing," as stated in a note from the Parliament's services. The stance is clear: "rapid and sustainable financing" is required. And in the commission's view, this translates into a mixed solution that will directly affect the pockets of workers and consumers. The plan, already broadly approved by the Council of States last June,...

Dettagli operativi

Direct Impact on the Frontaliere's Payslip What does this plan concretely mean for those who cross the border at Chiasso or Ponte Tresa every day? An increase in salary contributions would result in a heavier deduction from the monthly payslip. Currently, the employee's contribution for AVS/AI/IPG is 5.3%. Any increase would directly erode the net salary, reducing the amount converted into euros at the end of the month. For a gross salary of 5,000 CHF, even a small decimal increase translates into tens of francs less each month, and hundreds per year. ## The VAT Increase and Costs in Ticino The other lever of the mixed financing is the VAT increase. Although this does not directly impact the payslip, it affects purchasing power within Switzerland. For cross-border workers, this means an increase in costs for all expenses made in Ticino: from midday lunch to coffee, from fuel to shopping at malls like FoxTown in Mendrisio. Every good and service subject to VAT would become more expensive. 📊 The Political Scenario The divergence between the vision of the Council of States (mixed and long-lasting financing) and that of the National Council (favoring only a temporary VAT increase) signals a complex parliamentary process. The file will have to go back and forth between the two chambers until an agreement is reached. This uncertainty makes it difficult for workers, including cross-border commuters, and for Ticino-based companies to accurately plan the future structure of costs and wages from 2026, the year the 13th AVS pension will be paid for the first time in December.

Punti chiave

What to Do Now? Plan for Uncertainty Although the 13th AVS monthly pension is a certainty starting from December 2026, its cost in terms of deductions and taxes is still unknown. Cross-border workers must therefore be aware that their net salary, for the same gross amount, could shrink in the coming years. This variable must be carefully considered in personal and family financial planning, especially for those with long-term commitments like mortgages or loans in Italy. 💡 Practical Advice When setting your future budget, it is prudent not to take the current net salary for granted. Instead, it is advisable to create simulations that account for a potential increase in social security deductions. This approach helps to avoid surprises and to adjust saving and spending strategies in a timely manner. The political discussion is still ongoing, and the final decision will directly influence the purchasing power of thousands of workers. To prepare for any scenario and understand how these potential changes could affect your payslip, it is essential to use updated calculation tools. Our net salary calculator allows you to simulate the impact of different contribution rates, offering a clear view of your future income. (Source: RSI, 14.09.2024)

Punti chiave

[{"q":"How much could the AHV salary contribution increase for a cross-border commuter in Switzerland from 2026?","a":"The exact increase is not yet defined, but for a gross salary of 5,000 CHF, even a small decimal increase could mean tens of francs less per month, and hundreds per year, due to the heavier deduction on the paycheck."},{"q":"What impact will the VAT increase have on the purchasing power of cross-border commuters in Switzerland?","a":"The increase in VAT will make all goods and services purchased in Ticino more expensive, reducing purchasing power. For example, a 20 CHF lunch could cost up to 20.7 CHF with a 1% increase in VAT."},{"q":"How does the taxation of cross-border commuters work in Ticino compared to other Swiss regions?","a":"Cross-border commuters in Ticino are subject to separate taxation, called 'withholding tax', where taxes are withheld directly in their paychecks. This rate is usually higher than in other Swiss regions to compensate for tax residency in Italy."},{"q":"What are the tax advantages for cross-border commuters working in Switzerland compared to Italy?","a":"Cross-border commuters in Switzerland enjoy higher salaries on average and withholding taxation. In addition, in Italy they can benefit from tax breaks such as the 'deduction for employment' or the 'Irpef bonus'."},{"q":"What happens if a cross-border commuter loses his job in Switzerland? Are you entitled to unemployment in Italy?","a":"Yes, cross-border commuters are entitled to unemployment in Italy, but they must comply with the requirements of Italian law, such as having worked at least 2 years in the last 24 months. The application must be submitted to INPS within 68 days of the end of the employment relationship."}]

Frequently Asked Questions
How much could the AHV salary contribution increase for a cross-border commuter in Switzerland from 2026?
The exact increase is not yet defined, but for a gross salary of 5,000 CHF, even a small decimal increase could mean tens of francs less per month, and hundreds per year, due to the heavier deduction on the paycheck.
What impact will the VAT increase have on the purchasing power of cross-border commuters in Switzerland?
The increase in VAT will make all goods and services purchased in Ticino more expensive, reducing purchasing power. For example, a 20 CHF lunch could cost up to 20.7 CHF with a 1% increase in VAT.
How does the taxation of cross-border commuters work in Ticino compared to other Swiss regions?
Cross-border commuters in Ticino are subject to separate taxation, called 'withholding tax', where taxes are withheld directly in their paychecks. This rate is usually higher than in other Swiss regions to compensate for tax residency in Italy.
What are the tax advantages for cross-border commuters working in Switzerland compared to Italy?
Cross-border commuters in Switzerland enjoy higher salaries on average and withholding taxation. In addition, in Italy they can benefit from tax breaks such as the 'deduction for employment' or the 'Irpef bonus'.
What happens if a cross-border commuter loses his job in Switzerland? Are you entitled to unemployment in Italy?
Yes, cross-border commuters are entitled to unemployment in Italy, but they must comply with the requirements of Italian law, such as having worked at least 2 years in the last 24 months. The application must be submitted to INPS within 68 days of the end of the employment relationship.

Related articles