Tax Deductions for Children Only for Swiss Residents

Context

In brief

• The UDC Ticino proposes to limit child tax deductions to Swiss residents only.
• Potential annual income for the Canton: 20 million francs.
• The proposal aims to correct a tax distortion favoring cross-border workers.
• The State Council has not yet presented a concrete strategy.

Key facts

• What: Proposal to limit child tax deductions to Swiss residents.
• When: Proposed in 2018, reintroduced in 2026.
• Where: Canton Ticino.
• Who: UDC Ticino, Paolo Pamini.
• Amount: 20 million francs per year.

The UDC Ticino has reintroduced an initiative first presented in 2018, which aims to limit child tax deductions exclusively to Swiss residents. This proposal, developed by Paolo Pamini, seeks to recover approximately 20 million francs per year for the Canton, addressing what is described as a tax distortion. Currently, even cross-border workers with children residing abroad, for example in Italy, can benefit from deductions intended for the cost of living in Switzerland. This creates a gap between the tax treatment of cross-border workers and residents.

Context of the proposal

The proposal comes at a time when the Canton Ticino is exploring strategies to recover resources, including discussions on the potential block of tax refunds related to the future health tax. However, the State Council has not yet presented a clear official position or a legally viable strategy to address the issue. According to the UDC, the State Council has raised expectations without providing concrete solutions.

The Federal Council's response to Lorenzo Quadri's interpellation 26.3205, dated May 21, 2026, confirmed that unilateral cuts or deductions from refunds are not permitted. This has further complicated the political landscape, leaving room for controversy and confusion. The issue is particularly sensitive in municipalities such as Chiasso, Lugano, and Mendrisio, where the presence of cross-border workers is high and child tax deductions are a significant factor in the tax burden.

Impact on cross-border workers

The UDC's proposal would significantly affect cross-border workers, who could lose child tax deductions if their children do not reside in Switzerland. For example, a cross-border worker with two children living in Italy could see their tax burden increase by approximately 2,500 francs per year. This could directly impact the economic viability of working in Ticino compared to other regions, such as the Canton of Zurich or Geneva, where tax conditions for cross-border workers differ.

The issue also raises questions about the tax treatment of cross-border workers compared to residents, potentially fueling tensions between the two groups. According to estimates, approximately 15,000 cross-border workers could be affected by this change, with an overall economic impact estimated at 20 million francs per year for the Canton.

Operational checklist

For affected cross-border workers, here is an operational checklist to assess the impact of the proposal: 1. Verify the tax residency of the children. 2. Calculate the amount of tax deductions currently applied. 3. Compare the tax burden with and without deductions. 4. Evaluate the economic viability of working in Ticino compared to other regions. 5. Consider possible fiscal alternatives, such as transferring residency to Switzerland.

Comparison of practical scenarios

• Current scenario: A cross-border worker with two children residing in Italy benefits from tax deductions totaling 2,500 francs per year.
• Proposed scenario: The same cross-border worker would lose the deductions, increasing the tax burden by 2,500 francs per year.
• Alternative scenario: If the cross-border worker transferred residency to Switzerland, they could maintain the deductions but would need to consider the additional costs associated with living in Switzerland.

Future perspectives

The UDC's proposal represents an attempt to redefine the tax treatment of cross-border workers, but many uncertainties remain. The State Council will need to develop a clear and legally sound strategy to address the issue, avoiding further tensions between cross-border workers and residents. In the meantime, cross-border workers will need to carefully evaluate the fiscal implications and consider possible alternatives to minimize the economic impact.

ARTICLE TITLE: Child tax deductions only for Swiss residents: UDC Ticino relaunches proposal

Operational details

Practical Analysis: What Changes for Cross-Border Workers?

The UDC Ticino proposal, if approved, would introduce a significant change in the taxation of cross-border workers with children. Currently, cross-border workers can benefit from tax deductions for children regardless of their place of residence. This advantage, introduced by the 2010 tax agreement between Italy and Switzerland, was designed to compensate for the higher cost of living in Switzerland, which is notably higher than in Italy. However, the new proposal limits these deductions to children residing in Switzerland, with significant economic impacts for thousands of families.

Comparison between the current situation and the proposed one

• Current Situation: Cross-border workers with children residing in Italy can deduct up to 10,000 francs per year for each child, regardless of income. This benefit is particularly significant for families with multiple children, who often rely on these deductions to balance the costs associated with the higher cost of living in Switzerland.
• Proposed Situation: Tax deductions for children would only be granted if the children reside in Switzerland. This change would result in an increase in the tax burden for cross-border workers with non-resident children, with economic impacts varying depending on the number of children and family income.

For example, a cross-border worker with two children residing in Italy, earning 80,000 francs annually, might see their taxes increase by around 4,000 francs per year. This calculation is based on the current deductions for children, which are 10,000 francs each, and the average tax rate in the Canton Ticino, which is around 20%.

Economic Implications

The proposal aims to recover around 20 million francs per year for the Canton Ticino. This amount, according to UDC estimates, could be used to finance other tax measures or improve public services, such as schools and transportation. However, this recovery would come at the expense of cross-border workers, who represent a significant portion of the Ticino workforce. According to 2022 data, cross-border workers account for about 30% of the active workforce in Ticino, with a higher concentration in the municipalities of Lugano, Chiasso, and Mendrisio.

Possible Scenarios

1. Increased Tax Burden: Cross-border workers with non-resident children might see their taxes increase, making working in Ticino less attractive. This could lead to a decrease in the purchasing power of cross-border families, with consequences for local consumption, especially in the retail and service sectors. 2. Reduced Competitiveness: If cross-border workers have to bear additional costs for working in Switzerland, they might be less inclined to accept low wages. This could reduce unfair competition against resident workers, but at the same time increase costs for Ticino companies, which might struggle to find qualified personnel. 3. Worker Migration: Some cross-border workers might decide to move to Switzerland to benefit from the tax deductions. This scenario could have a significant impact on the Ticino real estate market, already under pressure, and on local public services, such as schools and healthcare. For example, municipalities like Lugano and Mendrisio might see an additional increase in housing demand, with consequences for rent and house prices.

Checklist for Cross-Border Workers

• Verify Child Residence: If children reside in Italy, it is likely that tax deductions will no longer apply.
• Calculate Tax Impact: Use tax simulation tools to assess the increase in tax burden based on income and the number of children.
• Consider Relocation: Consider the possibility of moving to Switzerland to benefit from the deductions, taking into account associated costs (rent, schools, etc.).

Comparison of Practical Scenarios

• Family with Two Children Residing in Italy: Increase in taxes of around 4,000 francs per year.
• Family with Two Children Moved to Switzerland: No increase in taxes, but additional costs for rent and local services.
• Cross-Border Worker Without Children: No direct impact, but possible indirect repercussions on the labor market and public services.

In summary, the UDC Ticino proposal represents a significant change for cross-border workers with children, with economic and social implications that deserve thorough analysis. Interested families should carefully consider the tax and operational consequences, also considering the possible impacts on the labor market and the quality of life in Ticino.

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

What to do if the proposal is approved

If the proposal by UDC Ticino is approved, affected cross-border workers will need to carefully assess their tax situation and decide how to adapt to the changes. The proposal, which aims to limit tax deductions for children to Swiss residents only, could have a significant impact on cross-border commuters. Here is a practical guide to dealing with this possibility:

1. Assess the tax impact

The first step is to estimate the effect of the new rules on your tax burden. Use the tax calculator available online to get a personalized estimate. For example, a cross-border worker with an annual income of 70,000 CHF and two children could see their taxes increase by 3,000-4,000 CHF per year if the deductions are eliminated.

2. Consider moving your residence

If tax deductions for children become a determining factor, it may be worth considering moving your residence to Switzerland. However, this involves significant additional costs, such as renting or buying a home, especially in Ticino municipalities like Lugano or Bellinzona, where real estate prices are high. Additionally, moving requires obtaining a B Permit, which allows you to reside in Switzerland but requires careful planning.

3. Consult a tax expert

A tax advisor specializing in cross-border workers can provide personalized advice on how to optimize your tax situation based on the new rules. For example, they may suggest strategies to offset the tax increase, such as optimizing work-related expense deductions or reviewing your tax returns.

4. Monitor regulatory updates

The UDC proposal has not yet been approved and may undergo changes during the legislative process. It is important to stay informed through official sources, such as the Canton Ticino website or the Federal Tax Administration portal. Additionally, it is useful to subscribe to newsletters or follow forums dedicated to cross-border workers to receive timely information.

5. Consider work alternatives

If the tax burden becomes unsustainable, it may be necessary to consider work alternatives. For example, remote work could allow you to keep your job in Switzerland while reducing travel costs. Additionally, it may be worth exploring employment opportunities in Italy, especially if you live in border provinces like Varese or Como.

Operational checklist

• Calculate the tax impact using an online tool.
• Evaluate the costs of moving your residence to Switzerland.
• Consult a tax expert for personalized advice.
• Monitor regulatory updates through official sources.
• Explore work alternatives, such as remote work or jobs in Italy.

Comparison of practical scenarios

Conclusions

The UDC Ticino proposal raises important issues for cross-border workers, who could see their tax situation change radically. However, with careful planning and the use of appropriate tools, it is possible to adapt to the changes and continue to benefit from the opportunities offered by the Ticino job market.

Calculate your net salary to understand how the new rules would impact your income.

Source: comozero.it