Working in Ticino as a border worker: what changes? (cross-border guide)

Context

In a nutshell

• The new border agreement was signed on 23 December 2020.
• The Italian-Swiss Double Taxation Convention was signed on 9 December 1976.
• Border workers who live in Oltrona di San Mamette and work in Ticino can benefit from a deductible of 10,000francs.
• Switzerland is not a member of the European Union (EU) or the European Economic Area (EEA).

Key facts

• What: New border agreement.
• When: 23 December 2020.
• Where: Oltrona di San Mamette, Ticino.
• Who: Frontier workers who live in Oltrona di San Mamette and work in Ticino.
• Amount: Deductible of 10,000francs.

Working in Ticino as a border worker: what changes?

The new border agreement was signed on 23 December 2020 and provides for a deductible of 10,000francs for border workers who live in Oltrona di San Mamette and work in Ticino. This agreement was signed by Switzerland and Italy and aims to avoid double taxation of border workers' incomes.

How does the new border agreement work?

The new border agreement has been signed to avoid double taxation of the incomes of border workers who live in Oltrona di San Mamette and work in Ticino. Under this agreement, frontier workers can benefit from a deductible of CHF 10,000 on their income. This means that frontier workers will not have to pay taxes on the first 10,000francs of their income.

Concrete example

Let's imagine we have a

Operational details

The avoidance of double taxation of frontier workers' incomes is guaranteed by the Italian tax credit. Furthermore, Switzerland is not a member of the EU or the EEA, which means that frontier workers living in Oltrona di San Mamette and working in Ticino are not subject to double taxation of income.

However, it is important to note that Switzerland has an agreement with the European Union that guarantees the free movement of people and services. This means that border workers can work in Switzerland without having to obtain any special permits. In addition, frontier workers are subject to Swiss income law, which provides for an income tax of approximately 10% on gross income.

A concrete example is the following: if an Italian border worker lives in Oltrona di San Mamette and works in Ticino, his income is subject to Swiss income tax of 10%. In addition, the Italian border worker can apply for the Italian tax credit, which allows him to avoid double taxation of income.

The legislation that regulates the situation of border workers in Switzerland is the Federal Income Act of 2010, which provides for an income tax of about 10% on gross income. In addition, Switzerland has an agreement with the European Union that guarantees the free movement of people and services.

For border workers living in Switzerland and working in Ticino, it is important to note that Switzerland is not a member of the EU or EEA, which means that

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Key points

For border workers living in Oltrona di San Mamette and working in Ticino, it's essential to consider the tax implications of the new border worker agreement. It's advisable to consult a tax advisor to verify your conditions and benefit from the CHF 10,000 exemption.

The CHF 10,000 exemption

The CHF 10,000 exemption is a tax benefit granted to border workers working in Ticino. This means they won't be taxed on their income up to a maximum of CHF 10,000. For example, if a border worker works in a company in Lugano and earns CHF 40,000 per year, they won't be taxed on the first CHF 10,000, but only on the remaining CHF 30,000.

Swiss taxation

In Switzerland, taxation is calculated based on income. Border workers working in Ticino are subject to Swiss taxation, which varies depending on the canton and municipality of residence. In Ticino, taxation is 10% on taxable income. For example, if a border worker earns CHF 40,000 per year and has a taxable income of CHF 30,000, they will pay CHF 3,000 in taxes.

Italian taxation

In Italy, taxation is calculated based on income. Border workers working in Ticino and residing in Italy are subject to Italian taxation, which varies depending on income and municipality of residence. In Lombardy, taxation is 23% on taxable income. For example, if a border worker earns CHF 40,000 per year and has a taxable income of CHF 30,000, they will pay CHF 6,900 in taxes.

Taxation in both countries

In some cases, border workers may be subject to taxation in both countries. This can happen if the border worker earns income in both countries. In this case, it's essential to consult a tax advisor to verify your conditions and benefit from the CHF 10,000 exemption.

Concrete examples

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