Border refurbishments: the new political weapon between Switzerland and Italy (cross-border guide)

Context

Brief overview

• The Ticino has provisionally frozen 502 million Swiss francs.
• The Grisons threaten to block payments for a 26 million Swiss francs credit.
• Refunds become a political lever in Italian-Swiss relations.
• The 'health tax' in Lombardy is at the center of the Ticinese dispute.

• What: Provisional blocking of refunds for border workers
• When: September 2024 (reference period for decisions)
• Where: Canton Ticino and Canton Grigioni towards Lombardy
• Who: Ticinese State Council and Grisons Government
• Amount: 502 million Swiss francs (Ticino); 10 million Swiss francs annually (Grisons)

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Operational details

The Transformation of Restitution into a Negotiating Lever

The use of restitution as a tool of political pressure is not a new phenomenon in the transfrontier landscape, but the frequency and contemporaneity of current events change its weight. Already in 2011, the Canton of Ticino had withheld half of the funds, amounting to approximately 28.4 million francs, to prompt the governments of Rome and Bern to initiate negotiations on new fiscal agreements and resolve the problems related to the 'black list' of Italy. Another episode occurred in 2019, when 3.8 million francs were blocked to induce the Municipality of Campione d'Italia to regularize the arrears owed to the Canton. However, the current situation appears different: we are no longer facing a single isolated act, but a strategy that involves multiple Swiss authorities against Lombardy for heterogeneous reasons, ranging from health taxation to Olympic costs. This scenario of institutional tension raises doubts about the tenability of the existing agreements. For workers, the main issue concerns the continuity of the compensation mechanism, fundamental for the financing of many infrastructure and services in border municipalities. The so-called 'health tax', provided for by the Italian Budget Law 2024, aims to finance the National Health Service, imposing a contribution between 3% and 6% of the annual net income. Lombardy has opted for the 3% rate, applicable from September 2026. The Ticino's decision to block funds is intended as a safeguard for the old frontiersmen, those who worked in Switzerland before the entry into force of the new Agreement in July 2023. The complexity of the situation is exacerbated by the fact that the Lombard measure is still awaiting the implementing decree, making the timing of…

Key points

Procedures and prospects for workers

For those who work daily in Ticino or in the Grisons, the block of deductions raises practical questions about the management of their fiscal relationships. Although the decision to suspend payments is a political act between institutions, the long-term consequences can affect the services that border municipalities benefit from thanks to these funds. There is no direct procedure that the worker can implement to change this situation, as competence remains with the cantonal administrations and the MEF. However, it is essential that every border resident remains updated on the publication of the implementing decree related to the 'health tax', as its entry into force, scheduled for 2026, will require careful planning for what concerns fiscal deductibility. To avoid surprises, it is advisable to regularly consult a tax consultant to check how the Swiss source tax intersects with the new Italian requirements. The difference in approach between Lombardy, which intends to apply the contribution, and Piedmont, which has chosen to waive it, shows how fiscal residence and workplace play a determining role. It is essential to note that Switzerland, despite being a crucial economic partner, is not a member of the EU, which means that fiscal disputes must be resolved through the diplomatic channels provided for by the Convention against double taxation. Workers should use the official data provided by the Federal Administration of Contributions to understand how federal and cantonal rates are structured, avoiding relying on unconfirmed speculation. In the absence of concrete developments between Bellinzona, Chur, and Milan, monitoring official communications is the only way to prevent errors in income tax declarations. For those who want to…