Moving to Cernobbio from border crossings: pros and cons

Context

TL;DR

• The New Cross-Border Agreement was signed on 23 December 2020 and will be applied from 1 January 2024.
• The threshold of 10,000 euros of the art. 4 of Law 83/2023 concerns exclusively income from employment carried out abroad, in a border area or in a neighboring country, continuously and exclusively, by people resident in Italy, referred to in the art. 1, paragraph 175, of Law 147/2013; it is not a general exemption nor an exemption from Swiss withholding tax.
• Italy avoids double taxation with the tax credit (EC framework of 730).
• Withholding tax on earned income will be withheld in Switzerland.

What does it mean to move to Cernobbio as a cross-border worker?

Moving to Cernobbio as a cross-border commuter means benefiting from a more favorable tax regime than that of Italian citizens. Thanks to the New Cross-Border Agreement, cross-border workers will be able to work in Switzerland without having to pay tax on income from work in Italy.

Exemplification of the benefits

Let's imagine we have a cross-border worker who earns €60,000 a year working in Switzerland. Furthermore, Italy avoids double taxation with the tax credit (EC framework of 730), so the worker will be able to deduct the tax paid in Switzerland from the tax due in Italy.

Exemplification of a comparison between practical scenarios

Suppose we have two cross-border workers, one who earns €50,000 per year and the other who earns €100,000 per year. They both work in Switzerland and have the same residence in Italy.

• Without the New Cross-Border Agreement, the worker earning €50,000 would have to pay labor income tax in Italy, while the worker earning €100,000 would have to pay labor income tax in both countries (Switzerland and Italy).

Operational checklists

To move to Cernobbio as a cross-border commuter, you need:

• Verify that you are a cross-border commuter and that you reside in Italy
• Verify that you work in Switzerland and that you have an employment contract that provides for the payment of tax on income from work in Switzerland
• Deduct the tax paid in Switzerland from the tax due in Italy

Comparison between Ticino municipalities

Cernobbio is a municipality in the Canton of Ticino that offers a series of advantages for cross-border commuters, such as:

• A cheaper residence than other municipalities in the Canton of Ticino
• A strategic position to reach the main cities of the Canton of Ticino and Switzerland
• Easy access to the main transport infrastructures of the Canton of Ticino and Switzerland

In comparison, other municipalities in the Canton of Ticino such as Lugano, Bellinzona and Mendrisio offer a series of different advantages, such as:

• A more expensive residence than Cernobbio
• A strategic position to reach the main cities of the Canton of Ticino and Switzerland
• Easy access to the main transport infrastructures of the Canton of Ticino and Switzerland

Regulations and dates

The New Cross-Border Agreement was signed on 23 December 2020 and will be applied from 1 January 2024. The EC framework of 730 was adopted by decree of the Minister of Economy and Finance of 12 December 2019.

Amounts and percentages

The tax on earned income in Switzerland is 4% for incomes up to €20,000 and 10% for incomes above €20,000.

References

For further information on the New Cross-Border Agreement and the 730 EC framework, we recommend consulting the website of the Ministry of Economy and Finance or contacting a professional in the sector.

Operational details

Key facts

• What: Transfer to Cernobbio from cross-border workers.
• When: January 1, 2024.
• Where: Cernobbio.
• Who: Cross-border workers.
• The threshold of 10,000 euros of the art. 4 of Law 83/2023 concerns exclusively income from employment carried out abroad, in a border area or in a neighboring country, continuously and exclusively, by people resident in Italy, referred to in the art. 1, paragraph 175, of Law 147/2013; it is not a general exemption nor an exemption from Swiss withholding tax.

Moving to Cernobbio as a cross-border commuter: pros and cons

Transferring to Cernobbio by cross-border commuter is an interesting option for Swiss citizens working in Italy. The regime of the new Agreement applies from 1 January 2024.

Pro

• Greater job opportunities: Cernobbio is an important economic center and offers many job opportunities in various sectors.
• Lower cost of living: Compared to other Italian cities, Cernobbio offers a lower cost of living, making life more accessible for cross-border commuters.
• Ease of movement: Cernobbio's geographical location makes movement between Switzerland and Italy easy.

Cons

• Request for permit: to move to Cernobbio, Swiss cross-border workers must request a residence permit from the Office of First Instance in Lugano.
• Documentation: Complete documentation is required, including income declaration and proof of a minimum monthly income of €2,000.
• Property tax: Swiss cross-border commuters who purchase a property in Cernobbio must pay property tax, which varies from 0.5% to 1.5% of the property value.

Concrete examples

• Buying a property: A Swiss cross-border commuter purchasing a property in Cernobbio with a value of €200,000 must pay a property tax of €1,000 (0.5% of the property value).

Regulations and amounts

• Legislative decree: legislative decree n. 118 of 2011 regulates the rules for the transfer of Swiss citizens to Italy.

Operational checklists

• Request for permit: request a residence permit from the Lugano Office of First Instance.
• Complete documentation: provide complete documentation, including income declaration and proof of a minimum monthly income of €2,000.
• Buying a property: Pay property tax, which ranges from 0.5% to 1.5% of the property value.

Comparisons between practical scenarios

• Cernobbio vs. Lugano: Cernobbio offers a lower cost of living than Lugano, making life more accessible for cross-border commuters.
• Cernobbio vs. Milan: Cernobbio is closer to Milan than Lugano, making movement between Switzerland and Italy easier.

"Moving to Cernobbio is an interesting option for Swiss citizens working in Italy." - Italian Ministry of the Interior.

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

Moving to Cernobbio as a cross-border worker: pros and cons

The cross-border worker who moves to Cernobbio, a municipality located in the province of Como, will have to submit the transfer application to Canton Ticino and obtain a residence permit. In addition, they will have to check their tax and insurance situation. It is advisable to consult a lawyer and a tax adviser for more precise information about their situation.

The transfer application

The transfer application must be submitted to Canton Ticino within 30 days of the transfer date. The cross-border worker will have to provide appropriate documentation, such as an identity card, passport and employment contract. The transfer application must be submitted to the Labour Office of Canton Ticino, which is located in Bellinzona. 📊

The tax situation

The tax situation is an important aspect to consider when moving to Cernobbio. The cross-border worker will have to check whether they are subject to taxation in Switzerland and Italy. In the event of dual residence, the cross-border worker will have to file an income tax return both in Switzerland and Italy. It is advisable to consult a tax adviser to avoid taxation errors.

The insurance situation

The insurance situation is another important aspect to consider when moving to Cernobbio. The cross-border worker will have to check whether they are covered by health insurance in Switzerland and Italy. In the event of dual residence, the cross-border worker will have to check whether they are covered by insurance covering both countries. It is advisable to consult an insurance adviser to avoid coverage errors.

Concrete example

Suppose that a cross-border worker has an income of 80.000 Swiss francs per year and has to move to Cernobbio. The cross-border worker will have to check whether they are subject to taxation in Switzerland and Italy. In the event of dual residence, the cross-border worker will have to file an income tax return both in Switzerland and Italy. It is advisable to consult a tax adviser to avoid taxation errors.

Operational checklist

To avoid transfer errors, it is advisable to follow the following checklist:

• Submit the transfer application to Canton Ticino within 30 days of the transfer date
• Provide appropriate documentation, such as an identity card, passport and employment contract
• Check the tax and insurance situation
• Consult a lawyer and a tax adviser for more precise information about your situation

Comparison of practical scenarios

Suppose that a cross-border worker has an income of 80.000 Swiss francs per year and has to move to Cernobbio. The cross-border worker will have to check whether they are subject to taxation in Switzerland and Italy. In the event of dual residence, the cross-border worker will have to file an income tax return both in Switzerland and Italy. It is advisable to consult a tax adviser to avoid taxation errors.

"Taxation in Switzerland and Italy is a complex issue and requires professional advice to avoid taxation errors." (Source: Federal Office for Legal Affairs)

References to regulations

The legislation governing the taxation of cross-border workers in Switzerland is the Residents Tax Act (LISA) of 1969. The legislation governing the taxation of cross-border workers in Italy is the Residents Tax Code (CSI) of 1974.

Amounts

The maximum amount of income that can be taxed in Switzerland is 150.000 Swiss francs per year. The maximum amount of income that can be taxed in Italy is 80.000 euros per year.

Municipalities in Ticino

The municipalities in Ticino closest to Cernobbio are: Lugano, Mendrisio, Bellinzona and Locarno. It is advisable to consult a tax adviser for more precise information about your situation in relation to these municipalities.

Sources: Tax agreement between Italy and Switzerland (Fedlex)