Swiss tax increase: what cross -border commuters need to know now!

Swiss tax increase: what cross -border commuters need to know now!

Vienna, Österreich - From January 1, 2024, a comprehensive reform of age and support insurance (AHV) comes into force in Switzerland, which was already accepted by a narrow majority of 50.5 % in a referendum in September 2022. This reform, known as AHV 21, is to secure the financing of the AHV by 2030 and includes important changes, including increasing VAT and adjustments to retirement age. According to vienna.at plan the Swiss persons an increase in VAT by 0.4 percentage points.

The normal rate is thus increased from 7.7 % to 8.1 %. The reduced sentence for food and the special rate for the hotel industry is also increased by 0.1 percentage points. These measures are intended to generate annual additional income of around CHF 1.4 billion for AHV. The average burden on households will be around CHF 200 per year, which is criticized by many members of the economy, while unions support this step.

New contribution rate for social insurance

In addition to VAT, there will be an increase in social security contributions from 2028. According to Derbund.ch , the contribution rates increase by 0.4 percentage points, whereas the contribution to unemployment insurance sinks by 0.2 points. This leads to an effective additional burden of only 0.2 percentage points for the compulsory insured. The higher contribution rates affect border commuters from Vorarlberg, who have to expect reduced net hems.

An important point in relation to the AHV reform is the introduction of the 13th AHV pension, which will be paid out from December 2026. In order to finance this additional pension, annual additional costs of up to five billion francs are shown. Financing takes place through the higher value rates mentioned as well as the increased contributions to old-age and support insurance. The AHV pension for cross-border commuters will depend on their type of employment in Switzerland.

retirement age and transition generation

The political compromise towards the reform, however, encounters criticism, in particular on the part of the Swiss People's Party (SVP) and the Free Democratic Party (FDP), which require structural measures to stabilize AHV. The reform itself also provided for the gradual increase in retirement age for women from 64 years to 65 years, starting in 2025, and for men the reference age remains 65 years. The transition generation of women born in the years from 1961 to 1969 receives special pension surcharges.

For these women, it will be possible for these women to get an old -age pension from 62, but with a lower cut rate. These adjustments are also intended to create incentives to continue gainful employment after reaching the retirement age. While the reform is regarded as a necessary step towards long -term protection of the system, the challenge remains to finance the AHV sustainably. Previous announcements indicate that future increases in VAT and contribution rates could be due at the earliest in 2036, depending on the state of health of the AHV fund.