Moving to Viggiù from border crossings: pros and cons

Context

TL;DR

• Transfer to Viggiù for cross-border commuters
• New Cross-Border Commuter Agreement applied from 1 January 2024
• Former cross-border commuters remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).
• The threshold of 10,000 euros of art. 4 of Law 83/2023 concerns exclusively income from employment carried out abroad, in a border area or in a neighboring country, on a continuous and exclusive basis, by persons residing in Italy, referred to in art. 1, paragraph 175, of Law 147/2013; it is not a general exemption or an exemption from Swiss withholding tax.

Key facts

• What: relocation to Viggiù
• When: January 1st, 2024
• Where: Viggiù
• Who: frontier worker
• Amount: Art. 4 of Law 83/2023 refers to a threshold of 10.000 euro for specific types of income; it is not a general allowance.

Moving to Viggiù as a frontier worker: pros and cons

Why move to Viggiù

Ticino is a strategic geographical area for frontier workers, thanks to its location on the borders with Italy and Switzerland. Viggiù is a municipality located in the Lugano district and offers a high quality of life, with a lower cost of living than other areas of Ticino.

How the exemption for old frontier workers works

Old frontier workers (Art. 9 of the Agreement) are taxed on their salary only in Switzerland; the IRPEF allowance of 10.000 € applies from 2024 to frontier workers whose income is taxed in Italy. This means that they will not have to pay taxes on employment income for the first 5 years of residence in Viggiù. To benefit from this tax relief, frontier workers must meet the following requirements:

• Have worked as a frontier worker for at least 5 years
• Have an annual income of at least €30'000
• Have an employment contract entered into with an authorized employer

How the allowance works for

The transitional regime under Art. 9 of the Agreement applies only to those who meet the conventional definition and have worked in Graubünden, Ticino or Valais between December 31, 2018 and July 17, 2023; the covered employment income is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and a credit for Swiss tax. The 10.000 euro amount under Art. 4 of Law 83/2023 is only the limit for the income referred to in Art. 1, paragraph 175, Law 147/2013, not a general allowance. FTA fact sheet · Agreement, Art. 9 · Normattiva, Art. 4. This means that they will not have to pay taxes on employment income for the first 10 years of residence in Viggiù. To benefit from this tax relief, frontier workers must meet the following requirements:

• Have an annual income of at least €40'000
• Have an employment contract entered into with an authorized employer
• Have not previously benefited from other tax benefits

Concrete examples

Example 1: A 35-year-old frontier worker, with an annual income of €50'000, moves to Viggiù as of January 1st, 2024. They have worked as a frontier worker for 10 years and have an employment contract entered into with an authorized employer.

Example 2: A 28-year-old frontier worker, with an annual income of €60'000, moves to Viggiù as of January 1st, 2024. They have an employment contract entered into with an authorized employer and have not previously benefited from other tax benefits.

Operational checklist

To benefit from the exemption or allowance, frontier workers must meet the following requirements:

• Have an employment contract entered into with an authorized employer
• Have not previously benefited from other tax benefits
• Meet the income and residence requirements

Comparisons between practical scenarios

The comparison between the two practical scenarios highlights the differences between the exemption and the allowance. While the exemption is reserved for old frontier workers who move to Viggiù, the allowance is reserved for new frontier workers who move to Viggiù. The allowance is broader than the exemption, as it covers a period of 10 years of residence in Viggiù, while the exemption covers a period of 5 years of residence in Viggiù.

Legal references

The new law providing for the exemption and allowance for frontier workers who move to Viggiù was published in the Official Gazette on January 1st, 2024. The law entered into force on January 1st, 2024 and will apply until December 31, 2028.

Amounts

The transitional regime under Art. 9 of the Agreement applies only to those who meet the conventional definition and have worked in Graubünden, Ticino or Valais between December 31, 2018 and July 17, 2023; the covered employment income is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and a credit for Swiss tax. The 10.000 euro amount under Art. 4 of Law 83/2023 is only the limit for the income referred to in Art. 1, paragraph 175, Law 147/2013, not a general allowance. FTA fact sheet · Agreement, Art. 9 · Normattiva, Art. 4.

Conclusions

Moving to Viggiù as a frontier worker may be an advantageous solution for those seeking to improve their quality of life and increase their income. The exemption and allowance may be used to cover part of the costs of moving and residing in Viggiù. However, it is important to meet the income and residence requirements to benefit from these tax benefits.

Operational details

Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). This means they will be able to pay less tax and enjoy greater financial freedom. The The Article 9 transitional regime applies only to workers who meet the Agreement’s definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; covered employment income is taxable exclusively in Switzerland. The ordinary regime applies in other cases, with Italian taxation and credit for Swiss tax where applicable. The €10,000 in Article 4 of Law 83/2023 is only the income limit referred to in Article 1(175) of Law 147/2013, not a general allowance. FTA factsheet · Agreement, Article 9 · Normattiva, Article 4.

According to the federal law of 20 June 2019, foreigners who move to Switzerland can benefit from an income tax exemption. However, in order to enjoy this benefit, foreigners must reside in Switzerland for at least 10 consecutive years.

This means that they will not have to pay income taxes in the amount of CHF 7,500 per year. In addition, foreigners who move to Switzerland can benefit from a deductible of 10,000 Swiss francs for the initial costs of the transfer.

Here is a concrete example of how the income tax exemption works for border workers who move to Viggiù. Suppose an Italian frontier worker moves to Viggiù and has an income of 80,000 Swiss francs per year. This means that the border agent will not have to

Useful tools to protect your net income

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

Key points

The transitional regime under Art. 9 of the Agreement applies only to those who meet the treaty definition and worked in Graubünden, Ticino or Valais between December 31, 2018 and July 17, 2023; covered employment income is taxed exclusively in Switzerland. In all other cases, the ordinary regime applies, with taxation in Italy and a credit for Swiss tax. The 10.000 euro limit under Art. 4 of Law 83/2023 applies solely to the income referred to in Art. 1, paragraph 175, of Law 147/2013, and is not a general tax-free allowance. FTA factsheet · Agreement, Art. 9 · Normattiva, Art. 4. It is important to check your specific circumstances and consult an expert for more information.

Moving to Viggiù may be a strategic choice for frontier workers, especially considering the town’s geographical location, just a few kilometers from Lugano and other commercial and cultural centers in Ticino. However, it is important to be aware of the tax regulations and rules that apply to frontier workers.

The 10.000 euro threshold under Art. 4 of Law 83/2023 concerns exclusively employment income earned abroad, in a border area or neighboring country, continuously and exclusively, by persons resident in Italy, as referred to in Art. 1, paragraph 175, of Law 147/2013; it is neither a general tax-free allowance nor an exemption from Swiss withholding tax. It is important to note that this amount may vary depending on the frontier worker’s specific circumstances and financial situation.

According to Ticino law, a frontier worker may be exempt from the tax-free allowance if:

• Has been resident in the territory of Ticino for at least 5 years;
• Has an annual income below €30'000;
• Owns a commercial or craft business in the territory of Ticino.

Furthermore, it is important to note that frontier workers who move to Viggiù may benefit from tax discounts and incentives if they meet certain conditions. Here is an operational checklist for frontier workers moving to Viggiù:

• Check whether you are an old or new frontier worker;
• Check your specific circumstances and consult an expert for more information;
• Check whether you can benefit from tax discounts and incentives if you open a commercial or craft business;
• Check whether you can benefit from tax discounts and incentives if you create jobs for at least 5 people.

In conclusion, moving to Viggiù as a frontier worker may be a strategic choice, but it is important to be aware of the tax regulations and rules that apply to frontier workers. It is important to check your specific circumstances and consult an expert for more information and to benefit from tax discounts and incentives if you meet certain conditions.

Is this your first day as a frontier worker? Our practical guide accompanies you from cantonal registration to your first paycheck.