Living in Cugliate-Fabiasco and working in Ticino as a border worker (cross-border guide)

Context

In a nutshell

• The New Frontier Agreement was signed on 23 December 2020. - Enters into force on 1 January 2024. - The New Frontier Agreement was ratified by Law 83 of 13 June 2023.

Key facts

• Tax at source on earned income withheld only in Switzerland for frontier workers. - Italy avoids double taxation with the tax credit (EC framework of 730). - Old frontier workers (already before 17 July 2023): exemption €7,500, transitional regime 2024-2033. - New frontier workers: deductible €10,000. - Italy-Switzerland double taxation agreement: signed on 9 December 1976. - Swiss rates/contributions: AVS/AI/IPG 5.3% employee, AD/AC 1.1% (cap CHF 148'200), LAINF 0.7-1.5%, LPP 7-18% by age group (from 25 years). - Italian personal income tax: 23% up to €28,000, 35% €28,001-50,000, 43% over €50,000.

The New Frontier Agreement provides for the withholding of income tax at source only in Switzerland for frontier workers, avoiding double taxation with the tax credit (EC framework of 730). Old frontier workers are entitled to an exemption of €7,500, while new frontier workers have an exemption of €10,000.

Concrete examples

Let's imagine that we have a border worker who works in Lugano and resides in Cugliate-Fabiasco. This individual has a working income of €60'000 and a capital income of €20'000. Under the New Frontier Agreement, income from work will be subject to tax at source only in

Operational details

Implications for Border Residents

• Border residents can benefit from a €10,000 exemption. - Old border residents can enjoy a €7,500 exemption. - Italy avoids double taxation with the tax credit (EU Framework of the 730).

Concrete Scenarios

• A border resident who is in a similar situation may benefit from the €10,000 exemption. - An old border resident who has already worked in Switzerland before July 17, 2023, may enjoy the €7,500 exemption. - A concrete example may be a border resident who works in Bellinzona and lives in Cugliate-Fabiasco, with an annual income of €40,000.

Comparison with the Previous Situation

• The previous situation provided for the withholding of income tax at source on income from work in both countries. - The new rule avoids double taxation with the tax credit (EU Framework of the 730). - A comparison with the previous situation may be useful to better understand the new rules.
• Border residents must check if they are beneficiaries of the €10,000 exemption or the €7,500 exemption. - Border residents must also verify if they are subject to double taxation and if they can benefit from the tax credit (EU Framework of the 730). - An operational checklist may be useful to help border residents understand the new rules.

Operational Checklist

• Check if you are beneficiaries of the €10,000 exemption or the €7,500 exemption. - Check if you are subject to double taxation and if you can benefit from the tax credit (EU Framework of the 730). - Check if you are a resident in Switzerland or Italy.

Comparison between Practical Scenarios

• A border resident who works in Bellinzona and lives in Cugliate-Fabiasco may benefit from the €10,000 exemption. - A border resident who works in Lugano and lives in Grancia may be subject to double taxation.

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Key points

Concrete examples

• A border worker who is in a similar situation, for example a worker from Lugano working in Ticino, could benefit from the €10,000 deductible, as provided for by the federal law of 17 July 2023. - An old frontier worker who has already worked in Switzerland before 17 July 2023, for example a merchant from Bellinzona, could benefit from the exemption of €7,500, as provided for by the federal law of 17 July 2023. - A border worker who has already worked in Switzerland for more than 10 years, for example a Locarno employee, could benefit from the exemption of €15,000, as provided for by the federal law of 17 July 2023.

• Question: Can I benefit from the €10,000 deductible? - Answer: Yes, if you are in a similar situation and have worked in Switzerland for more than 5 years, as required by the federal law of 17 July 2023. - Question: Can I enjoy the exemption of €7,500? - Answer: Yes, if you are an old border worker and have already worked in Switzerland before July 17, 2023, as required by the federal law of July 17, 2023. - Question: How can I verify my tax position? - Answer: By checking my tax return and consulting the Swiss Tax Office website. - Question: Can I benefit from the exemption of €15,000? - Answer: Yes, if you are a border worker and have already worked in Switzerland for more than 10 years, as required by the federal law of 17 July 2023.

Operational Checklists

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