Who are Frontaliers?
According to Wikipedia in French; frontaliers are those people who work in a different country to that in which they reside.
The Wikipedia article details a couple of stand points for different countries within Europe. For the purpose of this post I am going to concentrate on a Franco-Swiss aspect, i.e. living in France while working in Switzerland. I am doing this because it is exactly what my wife, Denise and I have done for a number of years now.
What are the Benefits of being Frontaliers?
There are a number of benefits in being frontaliers. The most obvious is to have work and Switzerland offers a higher level of remuneration in most areas. Coupled with that, the present exchange rate increases the strength of Swiss-based salaries.
Cost of Living
For many things the cost of living is lower in France especially meat and diesel to name but 2 items. VAT is lower in Switzerland so some things can be in fact cheaper over the border. I wouldn’t advise buying them as the Customs and Excise (Douanes) are very active in the area as one would expect!
Pension benefits in Switzerland are also most interesting. There are 3 levels or pillars (pilliers) that workers can pay into
- AVH/AVS – State pension
- Occupational Pension (Company Pension)
- Private Pension
The first 2 have a mandatory part and consequently the payments for these are taken at source. It is possible to buy some years back, certainly at the 2nd level. The third is optional. All receive tax relief when living in Switzerland, an important fact as well as increasing one’s pension. For those of us living in France there are similar optional private funds but be careful to purchase the correct type in order to claim tax relief. See what happened to us in our post on Tax.
Although housing near the border is relatively expensive compared to most of France, prices tend to be little lower than in Switzerland. When we bought our apartment we were able to secure a 100% loan whereas a minimum of 20% down-payment was needed in Switzerland. Unfortunately since the financial crisis this type of loan no longer exists.
It is possible to use one’s Swiss 2nd pillar pension fund to help purchase one’s primary residence. This is exactly what we did in the last year or so.
Finally, it comes down to preference. We really enjoyed our 2 years living in Switzerland before buying our apartment. We have to say there is something about living in France that draws us here!
How are Frontaliers Taxed?
There are different rules and processes for the different cantons (regions) of Switzerland. Basically Switzerland is a federation of different regions. There are laws that exist at a Federal level and laws at regional level too. Taxation agreements are made at the ‘Cantonal’ (Regional) level.
The Canton of Geneva
The city of Geneva and the surrounding area makes up this Canton. People who work in the canton are taxed at source. They declare their income to the French authorities and note how much tax was already paid in Geneva. The French tax then calculates what the tax should be. Should more be required a bill is sent to the individual. Of course, if too much was paid at source a reimbursement is given. I assume Geneva and France exchange the finances as per their agreement at the end of the whole process.
The Canton of Vaud
Vaud is the canton next to Geneva. We, who work in Vaud, pay our taxes directly to France. This is the agreement worked out by the 2 authorities. We tend to pay a monthly amount to the French impôts. After we fill in our tax forms the total bill is calculated and we will receive a bill or reimbursement. Clearly any money due to Vaud will be transferred by the French authorities. I guess!
Taxation on Pension Funds Taken Out for House Purchase
As said earlier, it is possible to use one’s 2nd tier pension fund to help purchase one’s primary residence.
- Once the demand is made Switzerland will take somewhere in the region of 5% – 7% tax depending on the canton.
- The gross amount also has to be declared on the French tax form.
- Tax is then taken again at 7.5%.
- After payment of French tax, a Swiss form stating prior payment of Swiss tax is filled in.
- This has to be authorised by the French tax office.
- This form is then sent back to the Swiss in order for a refund to be made.
Complicated heh!!!? Phew!
L’Association des Trans-frontaliers Franco-Suisses
The ‘Groupement Transfrontalier Européen‘ (The Franco-Swiss Frontaliers Association) was formed in 1963 to inform about and protect the rights of those people working across the border. From those early days they have grown to have 35,000 members, 7 offices near the border, 30 members of staff and about 100 voluntary workers.
Membership is €58 per year (2013 & €32 retirees) which gives individuals the chance to be informed of their rights and responsibilities as cross border workers.
The association gives advice on income tax, social security, day-to-day life amongst other things. Being viewed similar to a works council, their members may get discounts and offers from partner businesses such as Club Med, Jet Tours, health insurance with MMA, banking with Crédit Agricole and Crédit Mutuel.
It is well worth the €58 membership fee. Recently, as members, we were able to get advice on a particular aspect of taxation for free. A tax advisor (fiduciaire) would have charged in the region of €200-€250. Of course, there may be situations when employing a tax advisor is of vital importance. Their Frontalier Magazine comes out 5 times a year and there are numerous other publications available.
For a full list of benefits please view their website, but please note apart from the one page of welcome their site is in French.
Please note: We have no affiliated link to the Association; we are simply members that have been very pleased with the support we have received.