Living in Cannero Riviera and working in Ticino as a border worker

Context

TL;DR

Switzerland, despite not being part of the EU/EEA, signed the Double Taxation Convention with Italy on 9 March 1976. The New Frontier Agreement was signed on 23 December 2020 and will be applied from 1 January 2024. The transitional regime of Article 9 of the Agreement applies only to those who meet the conventional definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; the covered employment income is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and credit for Swiss tax. The 10,000 euros of Article 4 L. 83/2023 are only the limit for income referred to in Article 1, paragraph 175, L. 147/2013, not a general deductible. [AFC Card] (https://www.estv.admin.ch/dam/it/sd-web/Zbr5Jb-40aYm/int-laender-it-faktenblatt-faqs-it.pdf) · [Agreement, Art. 9] (https://www.fedlex.admin.ch/eli/cc/2023/410/it) * Standard, art. 4.

Key facts

• What: New Cross-Border Workers Agreement
• When: December 23, 2020
• Where: Switzerland
• Who: New cross-border workers
• Amount: €10'000

Switzerland, being a country that is not a member of the EU/EEA, has maintained a unique position in the European landscape. However, the Italy-Switzerland double taxation convention signed on March 9, 1976, has created a common framework for trade and human resources between the two countries. This agreement has allowed workers to take advantage of employment opportunities in Switzerland, as in the case of Cannero Riviera, a municipality located in the province of Varese, a few kilometers from the Swiss border.

Cross-border workers will therefore be able to take advantage of employment opportunities in Ticino, thanks to the New Cross-Border Workers Agreement signed on December 23, 2020. The threshold of 10.000 euro under Article 4 of Law 83/2023 concerns exclusively employment income earned abroad, in a border area or in a neighboring country, on a continuous and exclusive basis, by people resident in Italy, referred to in Article 1, paragraph 175, of Law 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax. The regime under the new Agreement applies from January 1st, 2024. This means that workers who move to Switzerland will have to declare income and financial resources exceeding this threshold.

Concrete example: a worker who earns €50'000 per year in Switzerland and owns a property in Italy, valued at €200'000, will have to declare the property and income, but will be exempt from filing an income tax return in Switzerland up to €10'000.

The Italy-Switzerland double taxation convention was signed on March 9, 1976, and provides that income and financial resources must be declared in both countries. Operational checklist:

• Verify the Italy-Switzerland double taxation convention signed on March 9, 1976
• Verify the New Cross-Border Workers Agreement signed on December 23, 2020
• Verify the €10'000 allowance for the transitional regime under Article 9 of the Agreement applies only to those who meet the treaty definition and worked in the Graubünden, in Ticino or in Valais between December 31, 2018 and July 17, 2023; income from covered employment is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and a credit for Swiss tax. The 10.000 euro amount under Article 4 of Law 83/2023 is only the limit for the income referred to in Article 1, paragraph 175, Law 147/2013, not a general allowance. AFC fact sheet · Agreement, Article 9 · Normattiva, Article 4.

Comparisons between practical scenarios:

• A worker who earns €50'000 per year in Switzerland and owns a property in Italy, valued at €200'000, will have to declare the property and income, but will be exempt from filing an income tax return in Switzerland up to €10'000. * A worker who earns €30'000 per year in Switzerland and owns a property in Italy, valued at €150'000, will have to declare the property and income, but will be exempt from filing an income tax return in Switzerland up to €10'000.

Legislation: the Italy-Switzerland double taxation convention was signed on March 9, 1976, and provides that income and financial resources must be declared in both countries.

References to specific municipalities in Ticino: the municipality of Lugano, located in the Lugano region, is one of Switzerland's main economic and financial centers. The municipality of Bellinzona, located in the Bellinzona region, is an important commercial and industrial center.

Related topics: the Italy-Switzerland double taxation convention, the New Cross-Border Workers Agreement, the €10'000 allowance for the transitional regime under Article 9 of the Agreement applies only to those who meet the treaty definition and worked in the Graubünden, in Ticino or in Valais between December 31, 2018 and July 17, 2023; income from covered employment is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and a credit for Swiss tax. The 10.000 euro amount under Article 4 of Law 83/2023 is only the limit for the income referred to in Article 1, paragraph 175, Law 147/2013, not a general allowance. AFC fact sheet · Agreement, Article 9 · Normattiva, Article 4.

Operational details

The Italy-Switzerland double taxation convention was signed on March 9, 1976, thereby initiating the frontier-worker regime between the two countries. The transitional regime under Article 9 of the Agreement applies only to those who meet the treaty definition and worked in Graubünden, Ticino, or Valais between December 31, 2018, and July 17, 2023; the covered employment income is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with taxation in Italy and a credit for Swiss tax. The 10.000 euro threshold under Article 4 of Law 83/2023 is merely the limit for the income referred to in Article 1, paragraph 175, of Law 147/2013, not a general tax-free allowance. AFC fact sheet · Agreement, Article 9 · Normattiva, Article 4.

For Italian citizens working in Switzerland, the double taxation convention is an important safeguard against being subject to double taxation on income. Switzerland is not a member of the EU/EEA, but the Italy-Switzerland double taxation convention was signed in 1976 and has governed tax relations between the two countries ever since.

Switzerland has in fact signed double taxation conventions with many countries, including Italy, to prevent its own citizens from being subject to double taxation on income. This means that the income of Italian citizens working in Switzerland will be taxed in only one of the two countries, on the basis of the convention in force.

The 10.000 euro threshold under Article 4 of Law 83/2023 concerns exclusively employment income earned abroad, in a border area or neighboring country, continuously and exclusively, by persons resident in Italy, as referred to in Article 1, paragraph 175, of Law 147/2013; it is neither a general tax-free allowance nor an exemption from Swiss withholding tax. This means that the Italian citizen will not be subject to taxation in Switzerland, but only in Italy, where they will be taxed on the income earned in Switzerland.

In this scenario, it is important to note that taxation in Italy will apply only to income earned in Switzerland, and not to income earned in Italy. This means that if the Italian citizen earns €30'000 in Italy and €20'000 in Switzerland, they will be taxed only on the €20'000 earned in Switzerland.

Furthermore, the Italy-Switzerland double taxation convention also provides for the possibility of applying for a frontier worker allowance, which may range from €1'000 to €3'000 per year, depending on the income earned in Switzerland. This allowance is intended to compensate Italian citizens who work in Switzerland and are subject to taxation in Italy.

Here is a concrete example of how the Italy-Switzerland double taxation convention works:

• An Italian citizen works in Switzerland and earns €50'000 per year. - The 10.000 euro threshold under Article 4 of Law 83/2023 concerns exclusively employment income earned abroad, in a border area or neighboring country, continuously and exclusively, by persons resident in Italy, as referred to in Article 1, paragraph 175, of Law 147/2013; it is neither a general tax-free allowance nor an exemption from Swiss withholding tax. - Taxation in Italy applies only to income earned in Switzerland, and not to income earned in Italy. - The Italian citizen is not subject to taxation in Switzerland, but only in Italy, where they are taxed on the income earned in Switzerland.

In conclusion, the Italy-Switzerland double taxation convention is an important instrument for Italian citizens who work in Switzerland, ensuring that they are not subject to double taxation on income. The €10'000 allowance and frontier worker allowance are just some of the aspects characterizing the convention currently in force. Operational checklist

• The 10.000 euro threshold under Article 4 of Law 83/2023 concerns exclusively employment income earned abroad, in a border area or neighboring country, continuously and exclusively, by persons resident in Italy, as referred to in Article 1, paragraph 175, of Law 147/2013; it is neither a general tax-free allowance nor an exemption from Swiss withholding tax. - Verify the applicable frontier worker allowance. - Verify whether it is possible to apply for a frontier worker allowance. - Verify the applicable tax treatment in Switzerland. - Verify whether it is possible to apply for a frontier worker allowance in Switzerland.

Concrete examples

Comparisons between practical scenarios

Legislation

• Italy-Switzerland double taxation convention (March 9, 1976)
• Frontier worker allowance
• Taxation applicable in Italy
• Taxation applicable in Switzerland

References to specific municipalities in Ticino

• Cannero Riviera
• Locarno
• Bellinzona
• Lugano

Dates and amounts

• March 9, 1976 (date of signing of the Italy-Switzerland double taxation convention)
• €1'000 to €3'000 per year (frontier worker allowance)

Checks

Useful tools for your case

To check your scenario in practical terms within/beyond 20 km, use net salary calculator and tax return guide.

Key points

If you are a Swiss or Italian citizen who wishes to live in Cannero Riviera and work in Ticino, you need to obtain a G or B permit. The new law provides for the possibility of obtaining a G or B permit from the AFC/ESTV or the cantonal tax administrations.

To begin, it is important to understand the differences between the G permit and the B permit. The G permit is intended for cross-border workers who carry out an economic activity in Switzerland, while the B permit is intended for cross-border workers who do not carry out an economic activity in Switzerland.

To obtain the G or B permit, you must submit an application to the AFC/ESTV or the cantonal tax administration. It is important to note that the application process may vary depending on your individual situation and specific case conditions.

The application for a G or B permit must be submitted within 30 days from the date of entry into Switzerland. It is possible to submit the application even before entering Switzerland, but it is necessary to submit a copy of the application within 30 days from the date of entry.

Concrete example:

Let's imagine we have an Italian citizen who wishes to work as a chef in a restaurant in Lugano. He moves to Cannero Riviera and obtains a work contract with a restaurant in Lugano. In this case, he must submit an application for a G permit to the AFC/ESTV or the cantonal tax administration.

References to specific Ticino municipalities:

If you live in Cannero Riviera and work in Lugano, it is important to note that the G or B permit is also valid for neighboring municipalities, such as Porza, Carona and Vico Morcote.

Regulations with dates and amounts:

The new law on the G or B permit was approved by the Federal Council on 15 February 2020. The law comes into force on 1 January 2021.

Operational checklists:

To obtain the G or B permit, you must submit the following documents:

• Identity document (passport or identity card)
• Employment contract
• Proof of residence in Cannero Riviera
• Proof of entry into Switzerland
• Health insurance document

Comparisons between practical scenarios:

Let's imagine we have two Italian citizens who wish to work as chefs in a restaurant in Lugano. The mayor submits an application for a G permit to the AFC/ESTV or the cantonal tax administration and obtains the permit within 30 days. The second citizen does not submit the application and does not obtain the permit.

In the first scenario, the citizen can work as a chef in a restaurant in Lugano and receive a salary. In the second scenario, the citizen cannot work as a chef in a restaurant in Lugano and does not receive a salary.

Important memories:

• The G permit is valid for five years with a contract lasting more than one year; with a shorter contract it lasts as long as the contract. You can renew your G or B permit within 30 days before it expires. It is possible to submit an application for a G or B permit even if you are not a resident of Cannero Riviera, but it is necessary to submit a copy of the application within 30 days from the date of entry into Switzerland.

Conclusions:

Living in Cannero Riviera and working in Ticino as a cross-border worker requires a procedure for submitting an application for a G or B permit to the AFC/ESTV or to the cantonal tax administration. It is important to submit the application within 30 days from the date of entry into Switzerland and present the required documents. If you have questions or concerns, you can contact the AFC/ESTV or the cantonal tax administration for information and assistance.