Thirteenth AVS Payment: The States Propose a Mixed Solution (cross-border guide)

Di Valerie Linc · Published on

The Council of States proposes a mixed funding approach for the thirteenth AVS monthly payment, combining an increase in payroll contributions and VAT. The Council of States believes this is the only balanced and equitable solution.

Contesto

TL;DR - Council of States proposes mixed funding for 13th AVS payment - Increase in payroll contributions and VAT to fund AVS - Mixed solution aims for financial sustainability of AVS ## Key facts - Proposal by: Council of States - Payroll increase: 0.3 percentage points - VAT increase: 0.4 percentage points - Annual funding increase: Approximately 300 million CHF - Impact on 60k salary: 180 CHF/year payroll, 6 CHF/month VAT - Impact on 80k salary: 240 CHF/year payroll, 8 CHF/month VAT - Initial National Council proposal: Exclusive VAT increase - Cross-border worker impact: Potential 200 CHF/year VAT, 50 CHF/month payroll The Council of States has put forward a proposal to fund the thirteenth AVS monthly payment, aiming to strike a balance between the needs of the social security system and the concerns of taxpayers. The Council of States, aware of the sensitivity of the issue, carefully evaluated the options, opting for a mixed solution. This proposal includes a 0.3 percentage point increase in payroll contributions and a 0.4 percentage point increase in VAT. For example, for an annual salary of 80,000 CHF, the increase in payroll contributions would be approximately 240 CHF, while the VAT increase, applied to a monthly expenditure of 2,000 CHF, would result in an increase of around 8 CHF. The National Council had initially proposed an exclusive increase in VAT, but the States preferred this mixed solution, considering the current economic situation. Additionally, they decided against reducing contributions to unemployment insurance, a measure that could have negatively impacted workers. The thirteenth AVS monthly payment is an important benefit for the elderly, and the States' proposal aims to ensure its financial sustainability. With this solution, it is estimat...

Dettagli operativi

Thirteenth AVS Payment: The States Propose a Mixed Solution The States' proposal to fund the thirteenth AVS monthly payment through an increase in VAT and payroll contributions has received a positive reception from industry experts. This strategy, which combines two funding sources, is considered a balanced and sustainable measure to ensure the financial stability of AVS. While the VAT increase may raise some concerns, it is actually a measure aimed at distributing the tax burden more fairly. VAT is a regressive tax that disproportionately affects the consumption of citizens with lower incomes. However, the proposed increase is moderate and should not have a significant impact on household budgets. For example, for a 100-franc purchase, increasing VAT from 7.7% to 8% would result in an additional expenditure of just 0.33 francs, a negligible amount compared to the total cost. Payroll contributions, on the other hand, are a more direct and targeted source of funding. Increasing payroll contributions primarily affects employers and workers with higher incomes, ensuring a more equitable distribution of the tax burden. This measure is considered fairer as it takes into account each individual's ability to contribute. For instance, a worker earning an annual salary of 100,000 francs would contribute a larger amount compared to a worker earning 50,000 francs. The combination of these two funding sources is seen as a balanced and reasonable solution. The limited increase in payroll contributions and VAT ensures that AVS funding is sustainable without overly burdening a particular group of taxpayers. Additionally, this strategy takes into account international best practices in pension funding. Many countries, such as Germany and France, have adopted similar solutions, dem...

Punti chiave

Thirteenth AVS Payment: The States Propose a Mixed Solution The Council of States' proposal to fund the thirteenth AVS monthly payment through an increase in VAT and payroll contributions is an idea that deserves attention. If implemented, this measure could have a significant impact on the Swiss social security system and, consequently, on cross-border workers in Ticino. For cross-border workers, it is crucial to understand the potential consequences of this decision. For example, a 2% increase in VAT could result in an additional cost of approximately CHF 200 per year for an average family spending CHF 10,000 on VAT-liable goods and services. Similarly, a 2% increase in payroll contributions could mean a reduction in net salary of around CHF 50 per month for a worker earning CHF 3,000. To assess the impact of these measures, it is advisable to use financial planning tools. For instance, the salary calculator on frontaliereticino.ch can help estimate the effect of the proposed increases on your budget. Simply input your salary and monthly expenses to obtain a personalized estimate. Additionally, it is important to stay updated on the progress of this proposal. The National Council will need to express its opinion on the matter, and the final decisions could have a significant impact on cross-border workers' financial future. Therefore, it is essential to regularly check the "News" section on frontaliereticino.ch, where the latest updates and any modifications to the proposals will be published. - 📊 Real-life example: For a cross-border worker in Lugano earning CHF 4,500, a 2% increase in payroll contributions could mean a reduction in net salary of approximately CHF 90 per month. - 💡 Tip: Compare your monthly expenses with the salary calculator's estimate to und...

Punti chiave

[{"q":"How much will the increase in salary contributions for the thirteenth AHV cost me with an annual salary of CHF 60,000?","a":"With an increase of 0.3 percentage points, the increase in salary contributions would be around CHF 180 per year."},{"q":"How will the mixed solution affect my balance sheet if I am a cross-border worker with a mixed income (CHF and EUR)?","a":"The mixed solution will impact with an increase in salary contributions (0.3% on income in CHF) and VAT (0.4% on expenses in CHF). For mixed income, calculate the impact on each currency separately and consider exchange rate fluctuations for a comprehensive analysis."},{"q":"How can I check whether the new thirteenth AHV also applies to my contributions as a cross-border worker residing in Italy?","a":"The thirteenth AHV applies to employees residing in Switzerland and whose income is subject to the Swiss AHV. If you are tax resident in Italy but work in Switzerland, check with your employer to see if you are subject to Swiss AHV through your contract or payslip. If you have any doubts, consult the cantonal tax office."},{"q":"Is there a way to calculate the combined impact of the increase in VAT and wage contributions on my monthly spending if I live in Italy but work in Switzerland?","a":"Yes. For VAT, it considers an average monthly expense (e.g. CHF 1,500) and applies the increase of 0.4% (approx. CHF 6/month). For salary contributions, calculate 0.3% more on your Swiss gross annual salary. Add the two amounts together to get the total monthly impact."},{"q":"If the mixed solution is approved, do I have to declare the increase in Swiss AHV contributions in my Italian tax return in Italy?","a":"No. Swiss AHV contributions are already deducted from your gross income in Switzerland and do not have t...

Frequently Asked Questions
How much will the increase in salary contributions for the thirteenth AHV cost me with an annual salary of CHF 60,000?
With an increase of 0.3 percentage points, the increase in salary contributions would be around CHF 180 per year.
How will the mixed solution affect my balance sheet if I am a cross-border worker with a mixed income (CHF and EUR)?
The mixed solution will impact with an increase in salary contributions (0.3% on income in CHF) and VAT (0.4% on expenses in CHF). For mixed income, calculate the impact on each currency separately and consider exchange rate fluctuations for a comprehensive analysis.
How can I check whether the new thirteenth AHV also applies to my contributions as a cross-border worker residing in Italy?
The thirteenth AHV applies to employees residing in Switzerland and whose income is subject to the Swiss AHV. If you are tax resident in Italy but work in Switzerland, check with your employer to see if you are subject to Swiss AHV through your contract or payslip. If you have any doubts, consult the cantonal tax office.
Is there a way to calculate the combined impact of the increase in VAT and wage contributions on my monthly spending if I live in Italy but work in Switzerland?
Yes. For VAT, it considers an average monthly expense (e.g. CHF 1,500) and applies the increase of 0.4% (approx. CHF 6/month). For salary contributions, calculate 0.3% more on your Swiss gross annual salary. Add the two amounts together to get the total monthly impact.
If the mixed solution is approved, do I have to declare the increase in Swiss AHV contributions in my Italian tax return in Italy?
No. Swiss AHV contributions are already deducted from your gross income in Switzerland and do not have to be declared again in Italy. However, if you have mixed incomes (CHF and EUR), check with an accountant for any reporting obligations in Italy.

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