No AVS Contributions on Tips: A Turning Point for Workers

Context

TL;DR

• Tips exempt from AVS contributions in Ticino from 2026.
• Workers keep 100% of tips, increasing disposable income.
• Employers save up to 2,500 CHF per employee annually.
• Electronic tips' taxation still under AVS 2030 reform.

Key facts

• Decision Date: March 2, 2026
• Votes in Favor: 42
• Average Tips: 200 to 500 CHF per month
• Employer Savings: Up to 2,500 CHF per employee annually
• Cross-Border Workers: 30% of the workforce in the sector
• Electronic Tips: 60% of transactions in many Ticino restaurants
• Implementation Date: January 1, 2026
• AVS Contribution Rate: 10.6% of tips

March 2, 2026, could mark a turning point for workers in the restaurant and service sectors in Ticino. With 42 votes in favor and one against, the Council of States has approved a motion by Beat Rieder (Centre/VS) that exempts voluntary tips from social contributions. This decision comes after years of discussions about the implications of tips in calculating the determining salary for social security contributions, particularly those related to AVS/AI.

📊 Tips: A Crucial Part of Income In the restaurant sector, tips often make up a significant portion of workers' income. For instance, in cities like Lugano and Locarno, a waiter can earn an average of 200 to 500 francs per month in tips, in addition to their base salary. Until now, these amounts were included in the calculation of social contributions, increasing the financial burden on both employees and employers. With the new regulation, voluntary tips will be excluded from the determining salary, providing financial relief for both parties.

💡 Concrete Impacts for Ticino Municipalities In tourist locations like Ascona and Bellinzona, where bars and restaurants constitute a significant part of the local economy, this change could further encourage the hiring of staff. According to estimates from GastroTicino, the industry association, an employer could save up to 2,500 francs per year per employee thanks to the new regulation. For cross-border workers, who make up about 30% of the workforce in the sector, the measure could result in a net increase in their disposable income.

⚠️ AVS 2030 Reform and Electronic Tips However, the issue of electronic tips remains unresolved. The Federal Council, as part of the AVS 2030 reform, is examining whether tips provided through digital payments — which now account for 60% of transactions in many Ticino restaurants and bars — should be taxed or included for social security purposes. Potential taxation could diminish the positive impact of the new regulation, especially in urban centers like Chiasso, where electronic payments are predominant.

• Checklist for Employers and Employees:

1. Monitor the official implementation date of the law (March 2026). 2. Adjust tip accounting systems in payroll software. 3. Verify the application of the regulation with local compensation funds (e.g., Lugano Servizi or Cassa Locarno). 4. Assess the impact of the AVS 2030 reform on electronic payment systems.

This decision represents a significant victory for restaurant workers in Ticino but requires ongoing attention from institutions to ensure fair and correct implementation of the regulation.

Operational details

No AVS Contributions on Tips: A Turning Point for Workers

From a regulatory perspective, the recent motion approved by the Swiss Parliament introduces an important change: tips, when they constitute a significant part of income, will no longer be subject to social contributions. This decision could have a significant impact, especially in sectors like the restaurant industry, where cross-border workers represent a substantial portion of the workforce. According to official 2023 data, around 30,000 Italian cross-border workers are employed in Ticino's trade and restaurant sectors, with a high concentration in cities like Lugano, Mendrisio, and Chiasso.

Currently, the law stipulates that if tips are negligible in amount, they are not considered for social security contributions. However, there is no uniform definition of 'negligible,' which has led to varying interpretations among employers and authorities. For example, a waiter working in Lugano earning 3,500 francs per month could supplement their salary with 300-400 francs in tips, accounting for about 10% of their income. Under the new regulation, this portion of income will no longer be subject to AVS contributions, resulting in savings for both the employee and the employer.

The growing adoption of electronic payments, especially via credit cards and apps, is changing the management of tips. In cities like Locarno, where tourism is a major economic driver, many restaurants now process over 70% of transactions electronically. This could complicate the tracking of tips and require adjustments in accounting systems. The Federal Council will need to clarify how these digital tips should be treated for tax purposes.

📊 Operational Checklist for Employers and Cross-Border Workers:

• Verify if tips constitute more than 5% of monthly income: if so, they may be considered 'significant.'
• Review electronic payment systems to distinguish tips from standard earnings.
• Monitor legislative updates: the AVS reform may include additional implementation details in 2024.

💡 Scenario Comparison:

• Current Scenario: A worker in Mendrisio receives 500 francs in tips per month; around 50 francs are deducted for AVS.
• New Law Scenario: The same worker would save these 50 francs, increasing their net income by 1.5%.

⚠️ For cross-border workers, who already face a higher cost of living in Ticino compared to their residences in Italy, any tax savings can make a difference. However, the motion's passage in the National Council is just the first step: legislative discussions will continue, and operational details will be crucial in understanding the real impact of this reform.

Useful planning tools

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Key points

For workers in the restaurant sector in Ticino, the recent news of the exemption of tips from AVS contributions represents a significant step forward, with important implications for both employees and employers. The legislative amendment, effective from January 1, 2026, stipulates that tips will no longer be considered part of the income subject to AVS contributions, thereby alleviating the contribution burden for both workers and businesses.

This change is particularly significant in municipalities like Lugano, Mendrisio, and Chiasso, where the restaurant sector employs a large number of cross-border workers. For instance, a waiter working in Lugano with a net monthly salary of 3,800 CHF who receives an average of 400 CHF in tips per month previously had to allocate about 10.6% of the tips (equivalent to 42 CHF) to AVS contributions. Now, under the new regulation, they will be able to keep the entire amount of tips, increasing their disposable income.

💡 Why is this relevant? The regulation allows workers to increase their net income and employers to reduce costs associated with contributions. However, it is essential to evaluate how this might affect retirement planning, as these amounts will no longer contribute to future pension calculations.

📊 Checklist for Employers and Employees:

• Consult your tax advisor to implement the new rules.
• Update payroll systems and salary calculations to exclude tips from AVS contributions.
• Use online tools like our salary calculator to simulate the impact of tips on net income.

⚠️ Note: This change applies only to tips declared separately from the salary; tips integrated into fixed income remain subject to contributions. Staying updated on regulations, especially for those working in the cross-border labor market, is crucial to optimizing economic and social security benefits.

Official sources: Old-age insurance system (FSIO)