Living in Saltrio and working in Ticino as a border worker: what changes?

Context

TL;DR

• Withholding tax is withheld in Switzerland for cross-border workers.
• Italy avoids double taxation with the tax credit (EC framework of 730).
• The New Cross-Border Agreement was signed on 23 December 2020 and will be applied from 1 January 2024.

Living in Saltrio and working in Ticino as a cross-border worker: what changes?

Ticino is a popular place to stay for many cross-border workers, thanks to its strategic geographical position and dynamic economy. However, life as a cross-border worker can be complex, especially when it comes to taxes and contributions. In this article, we will explore the main innovations of the New Cross-border Agreement and how these could affect cross-border workers living in Saltrio and working in Ticino.

Tax at source

Withholding tax is a tax that is withheld directly from the worker's salary. In Switzerland, withholding tax is applied only to cross-border workers, while in Italy it is not applied. This means that cross-border workers living in Saltrio and working in Ticino may have to pay withholding tax in Switzerland.

Here is a concrete example: if a cross-border worker lives in Saltrio and works in Ticino with a salary of 60,000 CHF per year, the withholding tax could be around 7,000 CHF per year (according to the 2022 rates). However, since Italy avoids double taxation with the tax credit, the worker may be able to recover some of this tax when he submits his 730 CE framework in Italy.

Tax credit

The tax credit is a tax benefit that allows cross-border workers to recover part of the taxes paid in Switzerland. In Italy, the tax credit is granted to cross-border workers who present their CE 730 framework.

According to Italian tax rules, the tax credit for cross-border workers is approximately 50% of the withholding tax paid in Switzerland. This means that if a cross-border worker pays CHF 7,000 per year in withholding tax in Switzerland, they could recover around CHF 3,500 per year with tax credit in Italy.

New cross-border workers agreement

The New Cross-Border Workers Agreement was signed on 23 December 2020 and will be applied from 1 January 2024. This agreement provides a series of innovations for cross-border workers, including a reduction in taxes and contributions.

According to Swiss tax rules, Withholding Tax for cross-border workers will be reduced by 10% starting from 1 January 2024. This means that if a cross-border worker pays CHF 7,000 per year in Withholding Tax in Switzerland, they could only pay CHF 6,300 per year starting from 2024.

Operational checklists

For cross-border workers living in Saltrio and working in Ticino, it is important to be aware of the following information:

• Tax at source: it is withheld in Switzerland for cross-border workers.
• Tax credit: it is granted in Italy to recover part of the taxes paid in Switzerland.
• New Cross-border Workers Agreement: will be applied from 1 January 2024 and provides for a reduction in taxes and contributions.

To avoid having to pay double taxes, it is important to present your CE 730 form in Italy and recover the tax credit.

Conclusions

Life as a cross-border worker can be complex, especially when it comes to taxes and contributions. However, with the innovations of the New Cross-border Agreement, cross-border workers who live in Saltrio and work in Ticino could benefit from a reduction in taxes and contributions. It is important to be aware of the information needed to avoid having to pay double taxes and recover the tax credit.

Operational details

Key facts

• What: New Cross-Border Agreement
• When: 23 December 2020
• Where: Switzerland
• Who: Swiss and Italian governments
• Amount: Not yet specified

The new Cross-Border Agreement, signed on 23 December 2020 by the Swiss and Italian Governments, introduces significant changes for cross-border workers who reside in Switzerland and work in Italy. This agreement aims to simplify bureaucratic procedures and reduce costs for workers crossing the border between the two countries.

Key changes

• Right of residence: Frontier workers who reside in Switzerland and work in Italy can enjoy a longer right of residence, up to 90 days, for each 12-month period.
• Residence limits: Cross-border workers can stay in Italy for a maximum of 183 days per year, provided they comply with the Swiss residency requirements.
• Right to work: Cross-border workers can exercise the right to work in Italy, provided they respect the labor rules and regulations in force in the country.
• Social contribution: Frontier workers are subject to social contribution both in Switzerland and in Italy, depending on their residence and place of work.

Concrete examples

• Example 1: A worker resides in Switzerland and works in Italy for 183 days a year. The worker can enjoy a 90-day right of residence, under the agreement.
• Example 2: A cross-border worker resides in Switzerland and works in Italy for 6 months a year. The worker can stay in Italy for a maximum of 183 days per year.

Operational checklists

• Verification of residence: Verify residence in Switzerland in order to enjoy the longer right of residence.
• Work verification: Check work in Italy to be able to exercise the right to work.
• Social contribution: Check social contribution both in Switzerland and in Italy, depending on your residence and place of work.

Comparisons between practical scenarios

• Scenarios 1: A cross-border worker resides in Switzerland and works in Italy for 6 months a year. The worker can stay in Italy for a maximum of 183 days per year.
• Scenarios 2: A cross-border worker resides in Switzerland and works in Italy for 12 months a year. The worker can enjoy a 90-day right of residence, under the agreement.

Regulations with dates and amounts

• Cross-border workers agreement: Signed on 23 December 2020 by the Swiss and Italian governments.
• Right of residence: Up to 90 days for each 12 month period.
• Limits of stay: Up to 183 days per year.
• Social contribution: Subject to social contribution both in Switzerland and in Italy.

References to specific Ticino municipalities

• Municipality of Lugano: One of the largest and most populous municipalities in Switzerland.
• Municipality of Mendrisio: A municipality located in the Ticino region.
• Municipality of Bellinzona: The capital of the Ticino region.

Useful tools for your case

To conveniently check your scenario within/beyond 20 km, use the net salary calculator and tax return guide.

Key points

Set to Source

The new law provides for the withholding tax to be withheld in Switzerland for frontier workers. New cross-border workers also declare their income in Italy and recover the Swiss tax through the tax credit, while old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).

To better understand this concept, let's imagine a concrete example. Suppose a frontier worker laughs in Saltrio and works in Ticino. This means that the border worker will be able to keep more money for their own personal expenses or to save money.

Double Taxation

Italy avoids double taxation with the tax credit (EC framework of 730). This means that border crossers will be able to claim the tax credit in Italy for taxes already paid in Switzerland.

For example, if a frontier worker lives in Bellinzona and works in Ticino, they can claim the tax credit in Italy for taxes already paid in Switzerland. This means that it will be able to reduce its tax debt in Italy.

New Frontier Agreement

The New Frontier Agreement was signed on 23 December 2020 and will be applied since 1 January 2024. This agreement provides for new rules for border crossers, including Tax at source and double taxation.

The New Frontier Agreement has been signed to simplify the tax rules for frontier workers. This agreement provides that border crossers can benefit from a reduction in

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