SHARE
COPY LINK
For members

CROSS-BORDER WORKERS

EXPLAINED: What cross-border workers should know about taxation in Switzerland

Cross-border workers can claim social deductions both in Switzerland and in their home countries. Here's what you need to know.

EXPLAINED: What cross-border workers should know about taxation in Switzerland
Cross-border workers enter Switzerland from toen of Como. MIGUEL MEDINA / AFP

Despite a recent reform effort, taxpayers who reside abroad and earn income in Switzerland will be able to continue to claim social deductions both in Switzerland and in their home countries.

Current Swiss law obliges cantons to take into account a deduction for family expenses when calculating withholding tax for non-residents. 

In June, conservative Ticino MP Marco Chiesa (SVP) presented a motion to the Council of States, the lower house of the parliament, to end this practice.

Chiesa argued that tax deductions for children, or young people who are in apprenticeship or at university, are already granted in the taxpayer’s home country.

However, on Wednesday, the majority of deputies rejected this proposal.

This means the current system of taxation imposed on non-resident foreigners who are employed in Switzerland, including an estimated 340,000 cross-border workers, will remain unchanged for the time being.

READ MORE: Reader question: Can I deduct working-from-home costs from my Swiss taxes?

What are the tax rules for cross-border employees in Switzerland?

An agreement between Switzerland and France, Italy, and Germany authorises cantons to subtract withholding tax (also known as taxation at source) from cross-border workers’ wages.

This system is different from the one used by resident workers, who declare their income and pay taxes in monthly instalments throughout the year.

The taxes that cross-border workers pay in Switzerland are deducted from their tax liability in their country of residence.

To determine the withholding tax rate, the total gross income from all employment, including supplementary earnings such as benefits from invalidity or accident insurance, are calculated. 

Employers then forward the levied amounts to cantonal tax authorities. 

This tax system applies only to G-permit border workers and foreigners who are not permanent residents.

This is how it works by country of residence:

Italy

The tax agreement signed between Bern and Rome in December 2020 distinguishes between “new” and “old” cross-border commuters. For those who start working in Switzerland after the agreement enters into force, the withholding tax rate will be 80 percent in favour of Switzerland, instead of the 70 currently. 

France

Under the taxation regime currently in place, permit G holders who work in cantons other than Geneva have their taxes collected by French authorities.

But if their place of employment is Geneva, taxes are paid in Switzerland.

Germany

Since 2019, a ‘day-count’ method is used to determine taxation of border workers.

This relates to 60 ‘non-return days’, defined as a day when the workers can’t return to Germany due to professional duties in Switzerland.

If the 60-day limit is not exceeded, the workers pay taxes in Germany. If it is, employees are subject to the Swiss withholding taxes system.

What about changes to the system?

Some tax changes were introduced in 2021.

Switzerland’s new law on taxation at source is intended to ensure compliance with rules stipulated in the EU/EFTA agreement on the free movement of persons.

Most specifically, its aim is to eliminate disparities in treatment between workers subjected to withholding tax and those under the ordinary taxation regime.

Also, the cantons will be required to standardise the calculation of withholding taxes throughout Switzerland.

Do all of the collected taxes stay in Switzerland?

While most of this money does remain in Switzerland, a portion is paid to the employees’ respective countries of residence or regional authorities there. 

This is how much tax Switzerland pays to workers’ home countries:

In 2020, Geneva paid 315 million francs from 2019 taxes to the French departments from where some 87,000 workers commute to their jobs in the canton each day. 

Under the deal worked out in 1973, 3.5 percent of the tax collected from cross-border workers goes to France, with 76 percent of that total transferred to Haute-Savoie and the rest to Ain — the two regions from which most workers commute to Geneva.

This sum is intended to compensate for the public charges incurred by cross-border workers in their French municipalities. The funds are supposed to be used for infrastructure projects of regional importance, in particular those managing mobility on both sides of the border.

Also in 2020, Ticino authorities had paid of nearly 90 million francs to Italy, collected from approximately 67,000 frontier workers employed in the canton.

Will the failure of negotiations between Switzerland and the European Union impact taxation of border workers?

The full extent of repercussions is not yet known, including on taxes.

However, in a broader sense there is concern in the border cantons that Switzerland’s decision to abandon the bilateral talks will influence their ability to employ G-permit frontier workers.

“Breaking off the negotiations is really problematic for us”, Serge dal Busco, the vice-president Geneva’s government said in an interview with Swiss media.

READ MORE: What impact could the Swiss-EU stalemate have on cross-border workers?

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

LIVING IN SWITZERLAND

How to dispose of unwanted furniture or whitegoods in Zurich legally

Got an unwanted mattress, fridge or sofa? Here’s how you can legally get it off your hands in Zurich.

How to dispose of unwanted furniture or whitegoods in Zurich legally

If you’ve bought a new piece of furniture in Zurich or a mattress, you may be faced with the problem of what to do with the old one. 

This is particularly the case in cities like Zurich, where space is at a premium and you may not be able to kit out your spare room with the old furniture. 

While there are waste disposal centres, even getting there without a car can be a problem. 

One man’s trash…

First things first, think about whether you really need to get rid of the thing in question. 

While you may not want it, there may be someone out there willing to take it off your hands – particularly if you aren’t going to charge them. 

The first point of call is to ask your friends and colleagues if they’re interested, with social media the perfect place to ask around. 

If you live in an apartment complex, you might try placing the item in a common area with a note saying “zu verschenken” (to give away) or ‘gratis’ (free). 

After that, there are several online options like eBay, Facebook Marketplace, Free Your Stuff Zurich, Ricardo, Anibis, Craig’s List and Tutti. 

Some of these sites will charge a fee – even if you’re giving something away – so be sure to read the fine print first. 

Another option is to donate the goods to a charity organisation. They will usually charge you money to pick it up and prices can vary dramatically. 

Caritas charge CHF35 per 100kg plus transport costs, while Sozialwerk Pfarrer Sieber will pick up small items of furniture for a flat fee, although you’ll need to send them pictures first before they give you a quote. 

Can I put old furniture on the street in Zurich? 

Although less common than many other European cities, occasionally you will see furniture out on the street in front of homes and apartment blocks in Zurich. 

While it might clutter up the sidewalk, it is technically not illegal – provided you only do so for a maximum of 24 hours. 

You also need to make sure it doesn’t block cars, bikes or pedestrians. If it does – or if you leave it out for longer – you risk a fine.

Entsorgungstram: Zurich’s recycling and waste disposal tram

One option is the Entsorgungstram, a mobile recycling centre on rails for all Zurich residents. 

This tram weaves its way through several parts of Zurich, picking up old bulky waste including electrical devices and furniture. 

If you are lucky to live near an Entsorgungstram line, just check the timetable and bring your waste items along to meet the tram. 

There are some rules, as laid out by the Zurich council. 

“The delivered items must not be longer than 2.5 meters (exception: sofa/upholstered furniture can be no longer than 2 meters) and no heavier than 40 kilograms per item. Separate the material beforehand according to its composition: flammable, large metal and landfill”. 

Unfortunately, only pedestrians and cyclists can use this service, i.e. you cannot drive from elsewhere and deposit the stuff. 

More information including route details can be found at the following link. 

Regular waste disposal

Your next option is to see whether you can get rid of it in your usual waste disposal. 

This being Switzerland, there are a lot of rules about what the waste management company will take and will not. 

If you’re throwing away a mirror, for instance, you cannot put that with your other glass waste and will need to dispose of it elsewhere. 

On the other hand, they may take things like carpets and mattresses – although you’ll need to pay a bit extra. 

The exact rules will depend on your municipality, but generally speaking you will need to buy additional waste stickers – which cost money. 

In Zurich itself, every household receives four coupons for disposal of waste (up to 100kg) each. 

When you run out of coupons, you’ll need to pay by the kilo. 

You’ll still need to bring it to the waste disposal facility, or pay a pick up fee of around CHF80. 

This may sound steep, but they do come to your home and pick it up – which will likely be cheaper than a rental car or van. 

In Winterthur, you will need to buy stickers for CHF1.80 from the council, with each sticker letting you dispose of 10kg of waste. 

Check with the retailer where you bought the new item

One option offered by furniture sellers is to buy your old furniture or whitegoods or accept them as a trade in. 

While this is likely to be more common with second hand retailers who might see potential in your unwanted item, it is also a service offered by retailers who only sell new goods. 

One example is Ikea, who will take your old mattress, furniture or electronic device and recycle it. 

This service is available at Ikea outlets for a cost of CHF10 each. 

It is also available when you get something new delivered, although you must pre-book so the driver can be sure to set aside enough space. 

This will cost you CHF80 for furniture, or CHF50 for electronic devices and mattresses. Keep in mind that (at least with Ikea) this service is only available when you buy something new. 

Several other furniture companies offer a similar service, including Schubiger Möbel, Möbel Pfister and Conforama.  

Electrical item retails will often take your old electrical goods for recycling, whether these are small like iPhones or large like fridges and washing machines. 

More information about which goods can be recycled and how in Switzerland is available at the following link. 

Moving companies

Removalist companies are another option – whether you are moving house or not. 

If you are moving house then a disposal service may be included in the overall fees. 

If not, you can still contact the company and get the item taken off your hands. 

While different companies will charge different amounts, you’ll usually pay per 100kg rather than per item, which can be a better (or worse) option than contacting the local council. 

Swiss comparison site Comparis has detailed info about how to find a moving company here

SHOW COMMENTS