Loss of earnings allowance: long term illness for the border worker (cross-border guide)

Context

Switzerland signed a new agreement with Italy on 9 December 1976 to avoid double taxation. This agreement, the Italian-Swiss Double Taxation Convention, has been updated to allow Ticino border workers to benefit from a more generous tax exemption and to enjoy a transitional regime for old border workers.

The new law provides for a tax exemption of 15% on financial and capital gains, calculated on the basis of a minimum age of 65 and a period of residence in Switzerland of at least 10 years. For new frontier workers, the deductible will be 10%.

The article focuses on the loss of earnings allowance for Ticino border crossers affected by a long-lasting illness. Switzerland has set up a fund for this purpose, which provides for a recognition of 75% of annual gross income up to a maximum of CHF 1,500 per month and CHF 18,000 per year.

For illustrations, suppose a Ticino frontier worker has an annual gross income of CHF 70,000. In this case, your loss of earnings allowance for long term illness could amount to CHF 52,500 per year.

As for the municipalities of Ticino, Lugano and Mendrisio are known to be important financial centres. The Italian-Swiss Convention against Double Taxation has favoured the migration of frontier workers to these cities. However, to take advantage of the tax exemption, frontier workers must

Operational details

Title: Loss of earnings allowance: long-term illness for the border worker, Ticino and Switzerland

The new law has made significant changes to the loss of earnings allowance for Swiss border workers residing in Ticino. Old frontier workers, established in Switzerland before 2013, are entitled to an exemption of CHF 7,500. In return, the new frontier workers, who arrived in Switzerland after that date, have a deductible of 10,000francs. This transitional regime is foreseen until 2033.

To illustrate this change, consider the case of Franco, a Ticino frontier worker who has been working in Switzerland as a software developer for 15 years. Prior to the amendment, Franco benefited from an exemption of CHF 7,500 for a long-term illness. Now, since he is a new frontier worker, he will have to pay the deductible of 10,000francs. This means that in order to qualify for the loss of earnings allowance, Franco will have to incur higher expenses before he can start treatment, unless he exceeds the deductible in a day or in a shorter period.

In Ticino, some areas have higher unemployment rates than central Switzerland. For example, according to data from the Federal Statistical Office, the unemployment rate in Lugano is 4.6%, while in Bern it is 3.4%. This means that Ticino border workers may be more exposed to situations of loss of earnings due to a long-term illness

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Key points

Loss of earnings allowance: long-term illness for the frontier worker

For frontier workers and cross-border workers who are in a precarious health situation, it is essential to know how to claim the loss of earnings allowance. The calculation of the allowance amount can be done using the online salary calculator, which provides a precise estimate of the monthly amount you should receive.

To illustrate better, suppose a frontier worker receives a net salary of 4,000 francs per month. In case of long-term illness, the loss of earnings allowance should cover 60% of the prescribed income, i.e. CHF 2,400 per month (4,000 x 60%).

To claim the allowance, it is advisable to consult a lawyer specialising in labour law for personalised assistance. The lawyer may help the border worker to submit an application for an old-age or disability pension, the disbursement of which may be conditional on access to the loss of earnings allowance.

Success Stories

In Ticino, there are concrete examples of the success of the loss of earnings claim. For example, a Ticino frontier worker with a long-term illness received the allowance for almost three years, and during this time he was able to devote more time to his health care and rehabilitation.

Rules and Regulations

To claim the allowance, it is important to know the