LPP: Minimum of 2nd pillar remains at 1.25% (cross-border guide)

Context

In Brief

• The LPP confirms the minimum of the second pillar at 1,25% for 2026
• The new fiscal agreement 2026 does not modify the taxation of the second pillar
• Cross-border workers must be informed about the implications for their tax situation
• Double taxation remains an issue for cross-border workers

Key Facts

• What: Confirmation of the minimum of the second pillar of social security at 1,25%
• When: 2026
• Where: Canton Ticino
• Who: LPP (Professional League of Ticino)
• Amount: 1,25%

The Professional League of Ticino (LPP) has confirmed that the minimum of the second pillar of social security will remain at 1,25% for 2026. This decision was made considering the new fiscal agreement 2026, which does not foresee any changes to the taxation of the second pillar. The LPP explained that this decision was made to ensure stability and security for cross-border workers. Double taxation remains an issue for cross-border workers, but the LPP has assured that they are working to find solutions to address this problem. Cross-border workers must be informed about the implications for their tax situation and ensure they are aware of their tax obligations.

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Operational details

Practical Analysis

The confirmation of the minimum of the second pillar at 1.25% for 2026 has practical implications for cross-border workers. Workers will continue to pay the same amount of taxes for social security, which could have a significant impact on their financial situation. For example, a worker earning 4,000 CHF per month will have to pay 50 CHF in social security taxes, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase accordingly.

Cross-border workers must be aware of their tax obligations and ensure they are informed about their savings and investment options. The LPP has assured that they are working to find solutions to resolve the issue of double taxation, but there are no immediate solutions at the moment. For example, a family living in Bellinzona may have to face an increase in social security taxes if their salaries do not increase accordingly.

Comparison with Previous Situation

Before the new 2026 tax agreement, cross-border workers had to deal with the issue of double taxation. This issue has been partially resolved with the new tax agreement, but the confirmation of the minimum of the second pillar at 1.25% for 2026 means that cross-border workers will continue to pay the same amount of taxes for social security. This could have a significant impact on their financial situation, especially if their salaries do not increase accordingly.

For example, a shopkeeper earning 5,000 CHF per month will have to pay 62.50 CHF in social security taxes, regardless of whether they work in Switzerland or Italy. This could mean a reduction in their net salary, especially if their salaries do not increase accordingly.

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Key points

Action

Cross-border workers in Ticino need to be informed about the implications for their tax situation and ensure they are aware of their tax obligations. The LPP has assured that they are working to find solutions to resolve the issue of double taxation, but there are no immediate solutions at the moment. Cross-border workers should be aware of their savings and investment options and ensure they are aware of their tax obligations. For further information, cross-border workers can consult the LPP website.

📊 Concrete example: A Ticino worker earning 100,000 CHF per year and residing in Switzerland, may be subject to a 13% tax in Switzerland and 20% in Italy, if they do not optimize their tax situation. The LPP introduced new legislation in 2023 that allows cross-border workers to reduce their Swiss tax to 12% if they invest in collective investment funds (CIFs) for a minimum amount of 50,000 CHF.

💡 Practical tip: Cross-border workers can use the LPP's tax calculator to estimate their taxes and find the most suitable solutions. For example, a Lugano worker investing 70,000 CHF in CIFs could reduce their Swiss tax from 13,000 CHF to 8,400 CHF.

⚠️ Warning: Tax legislation changes frequently and cross-border workers need to ensure they are up-to-date on the latest changes. For example, the LPP introduced new taxation of work income in 2024 that could negatively impact cross-border workers who are not adequately prepared.

📊 Scenario comparison:

• Scenario 1: A Bellinzona worker who does not optimize their tax situation could pay a total tax of 26,000 CHF (13,000 CHF in Switzerland and 13,000 CHF in Italy). - Scenario 2: The same worker investing 70,000 CHF in CIFs could reduce their total tax to 21,400 CHF (8,400 CHF in Switzerland and 13,000 CHF in Italy).

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