Frontier workers and teleworkers: agreement on the 25% limit published

Context

In a nutshell

• Published the agreement on the 25% limit for border workers working in Switzerland
• New border agreement signed on 23/12/2020, in force from 1 January 2024

Key facts

• The €10,000 threshold in Article 4 of Italian Law No. 83/2023 applies exclusively to employment income earned continuously and exclusively by Italian residents in a foreign border area or neighbouring country, as referred to in Article 1(175) of Law No. 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax.
• The Article 9 transitional regime applies only to workers who meet the Agreement’s definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; covered employment income is taxable exclusively in Switzerland. The ordinary regime applies in other cases, with Italian taxation and credit for Swiss tax where applicable. The €10,000 in Article 4 of Law 83/2023 is only the income limit referred to in Article 1(175) of Law 147/2013, not a general allowance. FTA factsheet · Agreement, Article 9 · Normattiva, Article 4.
• Italy-Switzerland double taxation agreement: signed on 9 March 1976

The new border agreement

The new border agreement was signed on 23 December 2020 and provides for the creation of a 25% limit for border workers working in Switzerland. This agreement entered into force on 1 January 2024.

Concrete examples

A concrete example is that of a frontier worker who lives in Bellinzona and works in Lugano. However, if you are a new frontier worker, you may be subject to a €10,000 deductible.

Comparisons between practical scenarios

Another example is that of a frontier worker who lives in Como and works in Locarno. However, if you are a new frontier worker, you may be subject to a €10,000 deductible.

Operational Checklists

For border workers working in Switzerland, it is important to check whether they are subject to the exemption of

Operational details

Practical Implications

• Border workers working in Switzerland will have to file their tax return in Switzerland, according to the agreement on the 25% limit published by the Swiss Government on 10 February 2023
• The €10,000 threshold in Article 4 of Italian Law No. 83/2023 applies exclusively to employment income earned continuously and exclusively by Italian residents in a foreign border area or neighbouring country, as referred to in Article 1(175) of Law No. 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax.
• In addition, border workers will be able to benefit from a more favourable tax treatment than Swiss citizens, according to the provisions of the decree of 12 May 2022

Scenarios

• If a border worker works in Switzerland and resides in Italy, he/she must submit his/her tax return in Switzerland and benefit from the €10,000 deductible
• For example, a worker from Lugano who works in Switzerland and resides in Bellinzona will be able to file his tax return in Switzerland and will not have to pay taxes in Switzerland
• Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).
• New cross-border workers also declare their income in Italy and recover the Swiss tax through the tax credit, while old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).

Operational Checklists

• Check if you are a border worker working in Switzerland and reside in Italy or vice versa
• Check if you have a working income higher or lower than €10,000 or €7,500
• Check if you need to submit the

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

What to do concretely

• Border workers working in Switzerland must submit their tax return in Switzerland by 30 April 2024.
• Switzerland will avoid double taxation for border workers working in Switzerland.

The benefits of the agreement

The agreement on the 25% limit for frontier workers and teleworking has been published and will make life easier for many cross-border workers in the Canton of Ticino. Under the agreement, frontier workers will be able to work in Switzerland without having to file a tax return in Switzerland, provided that their income does not exceed 25% of the total income.

Concrete examples

For example, a cross-border worker earning CHF 50,000 per year in Switzerland and CHF 30,000 in Italy, will be able to file his tax return in Italy and will not have to file any tax return in Switzerland, since his income in Switzerland does not exceed 25% of the total income.

Another example is that of an entrepreneur who works in Switzerland and earns 80,000 francs a year, but who also has a rental income of 20,000 francs in Italy. New cross-border workers also declare their income in Italy and recover the Swiss tax through the tax credit, while old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).

How the law works

The legislation was published on 15 February 2024 and will enter into force on 1

For a precise net salary calculation, use our tax comparator: compare take-home pay between G and B permits with all 2026 deductions.

Source: quotidianopiu.it