3rd Pillar Frontal
Consequences of the new law of January 1, 2021
Now it's All-in or nothing!
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January 1, 2021
New 3rd pillar law for cross-border commuters 2021
It’s now official: since January 1, 2021, the federal law on the revision of withholding tax on earned income has been in force for cross-border commuters. This law has consequences for the taxation of frontier workers.
One of the major changes will be that for some people it will no longer be possible to deduct their 3rd pillar cross-border income, while for others it will be possible to increase the maximum deductions for the 3rd pillar 3A cross-border income thanks to the 3rd pillar B cross-border income and a so-called “quasi-resident” tax return.
Let’s take a closer look at how this law will affect you.
Law of January 1, 2021
On April 11, the decision was finally announced: from 01.01.2021, cross-border 3rd pillars will no longer be tax-exempt (except in certain special cases).
This may seem a blow to cross-border commuters, since the tax deduction was an additional benefit for cross-border commuters’ 3rd pillar and represented a real saving.
Fortunately, there is a solution for cross-border commuters who would like to keep this tax advantage. In fact, they can opt for quasi-resident status and be taxed in the same way as Swiss residents. There are two points to bear in mind: Are you eligible for quasi-resident status? Is this status more advantageous for you or not?
Let’s find out how the system works.
What is quasi-resident status?
Quasi-resident status means filing the same tax return as a Swiss resident. This means you can deduct actual expenses, instead of having to pay tax at source, by completing a tax return. In this way, the quasi-resident cross-border commuter can deduct certain expenses, such as travel expenses, 3rd pillar A and 3rd pillar B contributions, etc. This is done by means of a request for withholding tax adjustments (which must be sent to the tax authorities before March 31, for the previous tax year).
What conditions must be met to qualify for this status?
To qualify for this status, cross-border commuters must have
90% of their income comes from Switzerland. These revenues include :
- Gross labour income :
salaries, bonuses, allowances - Real estate and investment income :
gross value of rental properties, interest on accounts… - Annuities, pensions, retirement
- Benefits: housing, family, unemployment…
Attention
However, it’s important to know that not everyone benefits from quasi-resident status. Indeed, if the new tax calculated is higher than the initial withholding tax, the quasi-resident will have to pay the difference . It would therefore be wise to have a simulation carried out by a tax specialist, to ensure that this quasi-resident status will truly optimize your tax situation.
also deduct free 3rd pillar 3B
For Geneva cross-border commuters, you can now also deduct the cost of Free 3rd pillar.
Here are the tax deductions for the canton of Geneva:
Single person: chf 2,200 / year
Married couple: chf 3,300 / year
Per child: chf 900 / year
Discover the advantages of the 3rd pillar cross-border commuter plan 2021.
