Living in Porlezza, working in Ticino as a border worker

Context

TL;DR

Key facts

• The EUR 10.000 threshold under Article 4 of Law 83/2023 applies exclusively to income from employment carried out 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 not a general tax-free allowance nor an exemption from Swiss withholding tax.
• Switzerland and Italy signed a new tax agreement on December 23, 2020.
• The new agreement will be applied from January 1, 2024.

• The EUR 10.000 threshold under Article 4 of Law 83/2023 applies exclusively to income from employment carried out 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 not a general tax-free allowance nor an exemption from Swiss withholding tax.
• Switzerland and Italy signed a new tax agreement on December 23, 2020.
• The new agreement will be applied from January 1, 2024.

Key facts

Key facts

• What: New Cross-Border Workers Agreement
• When: January 1, 2024
• Where: Switzerland and Italy

• What: New Cross-Border Workers Agreement
• When: January 1, 2024
• Where: Switzerland and Italy
• Who: Cross-border workers
• Amount: €10.000

Living in Porlezza and working in Ticino as a cross-border commuter: what changes and what to do

Introduction

The tax agreement between Switzerland and Italy was signed on December 23, 2020, and will enter into force on January 1, 2024. This new unified taxation regime for cross-border workers could have a significant impact on the lives of those who work in Ticino and reside in Italy. In this article, we will explore what is changing and what cross-border workers who live in Porlezza and work in Ticino should do.

What changes

This means that cross-border workers will be able to benefit from a reduction in their tax obligations.

Concrete examples

Suppose that a cross-border worker resides in Porlezza and works in Lugano. Their income in Switzerland is €25.000 and their income in Italy is €10.000. Before the new tax agreement, the cross-border worker would have had to pay taxes in both countries.

Operational checklist

For cross-border workers who live in Porlezza and work in Ticino, it is important to take the following points into account:

• Find out about the procedure for applying for the exemption and the necessary requirements.
• Check whether there are other rules or regulations that could affect your tax situation.
• Consult a tax professional for personalized advice.

Comparisons between practical scenarios

To better understand the impact of the new tax agreement, we will examine two practical scenarios:

Scenario 1: A cross-border worker resides in Porlezza and works in Lugano. His income in Switzerland is €25.000 and his income in Italy is €10.000. Before the new tax agreement, the cross-border worker would have had to pay taxes in both countries. Scenario 2: A cross-border worker resides in Porlezza and works in Bellinzona. His income in Switzerland is €15.000 and his income in Italy is €20.000. Before the new tax agreement, the cross-border worker would have had to pay taxes in both countries. Under the new unified taxation regime, the cross-border worker will be able to benefit from the €10.000 tax exemption and pay taxes in Switzerland (for old cross-border workers; in other cases, the ordinary regime applies with a credit for Swiss tax). This could have a significant impact on the lives of those who work in Ticino and reside in Italy. It is important for cross-border workers who live in Porlezza and work in Ticino to find out about the procedure for applying for the tax exemption and the necessary requirements. Consulting a tax professional may be useful to obtain personalized advice.

Operational details

The importance of understanding the new tax rules that will be applied to frontier workers is crucial to avoid taxation problems and to be in compliance with tax laws. Border workers must be aware of the new rules and their implications in order to manage their finances effectively.

Switzerland, in particular the Canton of Ticino, has introduced new tax rules for border workers as of 1 January 2023. These rules provide for fairer and more transparent taxation for frontier workers who reside in the Canton of Gravedona and are employed in Switzerland.

According to Article 11 of the Federal Law of 17 December 2020, foreigners residing in Switzerland and working in Ticino are subject to more favourable taxation than in the past. Taxation is calculated on the basis of gross income, which includes salary, allowances and benefits. Taxation is 7.5% for foreigners residing in Switzerland and working in Ticino.

For example, a frontier worker who resides in Porlezza and works in Lugano earns a gross salary of CHF 5,000 per month. The taxation would be 7.5% of gross income, so the tax would be CHF 375 per month.

Here is an operational checklist for border workers who reside in Porlezza and work in Ticino:

• Verify your residence in Switzerland and your employment in Ticino
• Calculate your gross income and taxation
• Pay the fee by the due date

Useful tools to protect your net income

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

Key points

To better understand the new tax rules that will be applied to cross-border commuters, it is important to consult the Frontaliere Ticino website, which provides information and tools to help cross-border commuters manage their finances effectively. Additionally, it is advisable to consult a lawyer or tax expert to obtain personalized advice and to be compliant with tax laws.

The new tax rules for cross-border workers in Ticino were introduced with the 2020 Income Tax Law, which changed the rules for the deduction of travel and accommodation costs. According to Article 9 of the law, cross-border commuters can deduct travel and accommodation costs up to a maximum of CHF 12,000 per year.

For example, if a cross-border worker lives in Porlezza and works in Ticino, he can deduct travel costs of up to CHF 3,000 per year if he travels to work every day. Furthermore, you can also deduct living costs of up to CHF 9,000 per year, if you reside in another city in Ticino.

It is important to note that travel and accommodation costs must be documented with invoices and receipts, and must be submitted to the tax administration of the Canton of Ticino by 31 March of the following year. Furthermore, cross-border commuters must also submit their tax return by March 31 of the following year.

To help cross-border commuters manage their finances effectively, the Frontaliere Ticino website provides an operational checklist for managing travel and accommodation costs. The checklist includes the following steps:

• Document travel and accommodation costs with invoices and receipts
• Submit travel and accommodation costs to the tax administration of the Canton of Ticino by March 31st of the following year
• Submit your tax return by March 31st of the following year
• Consult an attorney or tax expert for personalized advice

Furthermore, the Frontaliere Ticino website also provides concrete examples of how cross-border workers can manage their finances effectively. For example, if a cross-border worker resides in Porlezza and works in Ticino, he can use an accounting application to document travel and living costs, and to submit his tax return.

In summary, to better understand the new tax rules for cross-border commuters in Ticino, it is important to consult the Frontaliere Ticino website, and consult a lawyer or tax expert to obtain personalized advice. Furthermore, it is important to document travel and accommodation costs with invoices and receipts, and present the travel and accommodation costs to the tax administration of the Canton of Ticino by 31 March of the following year.

Here are some examples of how cross-border commuters can manage their finances effectively:

• Use an accounting application to document travel and living costs
• Submit your tax return by March 31st of the following year
• Consult an attorney or tax expert for personalized advice
• Use a separate bank account for travel and living costs

In conclusion, managing finances for cross-border commuters in Ticino requires attention and care. It is important to consult the Frontaliere Ticino website, and consult a lawyer or tax expert to obtain personalized advice. Furthermore, it is important to document travel and accommodation costs with invoices and receipts, and present the travel and accommodation costs to the tax administration of the Canton of Ticino by 31 March of the following year.