Living in Valfurva and working in Graubünden as a border worker (cross-border guide)

Context

In a nutshell

• New double taxation agreement between Italy and Switzerland of 9 December 1976. - New tax agreement for Ticino border workers signed on 23 December 2020 and in force from 1 January 2024. - Tax at source on earned income withheld only in Switzerland for frontier workers.

Living in Valfurva and working in Graubünden as a border worker

If you're a border worker working in Switzerland and residing in Italy, the new 2020 tax agreement might seem like an opportunity to save money. But how exactly does it work and what do you need to know to make the most of this convention?

Tax at source on earned income

Under the new tax agreement, income tax at source is only withheld in Switzerland. This means that if you work in Switzerland, you will not have to pay Italian tax on your earned income.

For example, if you have a working income of CHF 50,000 per year, the tax at source in Switzerland will be around CHF 7,500. You will not have to pay Italian tax on the same income.

Double taxation agreement between Italy and Switzerland

The double taxation agreement between Italy and Switzerland was signed on 9 December 1976. This agreement provides that labour income earned in one country is taxed only in the country of residence, unless it is labour income earned in a third country.

For example, if you work in Switzerland and reside in Italy, your income from

Operational details

Key facts

• What: New double taxation agreement. - When: 9 December 1976. - Where: Italy and Switzerland. - Who: Ticino border guards. - Amount: Not yet specified. - What: New tax agreement for Ticino border workers. - When: 23 December 2020. - Where: Graubünden. - Who: Ticino frontiersmen. - Amount: Not yet specified.

Living in Valfurva and working in Graubünden as a border worker

Ticino border workers living in Valfurva and working in Graubünden have to manage a complex system of double taxation agreements between Italy and Switzerland. The history of these conventions begins in 1976, when the Italian government and the Swiss government entered into a new convention to avoid double taxation of income.

The 1976 convention had a significant impact on Ticino border workers working in Italy and living in Switzerland. In fact, according to the Italian law of 1977, Ticino border workers were not required to pay Italian taxes on income earned in Italy, but only Swiss taxes on income earned in Switzerland. This agreement allowed frontier workers to save money and invest in other assets.

However, in 2020, a new tax convention was stipulated for Ticino border workers working in Graubünden. According to this convention, Ticino border workers earning more than 80,000 Swiss francs per year must pay Italian taxes on income earned in Italy.

Useful tools to protect your net income

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

Key points

Living in Valfurva and working in Graubünden as a border worker

Ticino, with its snow-capped peaks and crystal-clear lakes, is a paradise for nature lovers. But for border workers, working in Switzerland and residing in Ticino can be a complex experience to manage. This is where the new tax agreement for Ticino border workers comes into play, which provides for the withholding of income tax at source only in Switzerland.

This means that frontier workers will not have to pay Italian tax on their pay. However, it is important to note that Switzerland is not a member of the EU/EEA and that the double taxation convention was signed on 9 December 1976.

A concrete example of how this agreement works can be seen in the case of a worker who resides in Valfurva and works in Graubünden. If you earn CHF 5,000 per month, the withholding tax in Switzerland will be around CHF 1,000 per month, based on federal taxation. In Italy, on the other hand, he would not pay any tax on his salary.

But what if the worker also has a property in Switzerland? In this case, you will have to pay property tax in Switzerland, which can range from 0.8% to 1.2% of the property amount per year. In Italy, on the other hand, he would not pay any property tax.

The double taxation agreement between Switzerland and Italy was signed on 9 December 1976 and provides that the employment income earned in Switzerland is

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