New border agreement: what changes for border workers in Ticino? (cross-border guide)

Context

New border agreement: what changes for border workers in Ticino? On 23 December 2020, the new border agreement was signed, which enters into force on 1 January 2024. This agreement has a transitional regime for old frontier workers valid until 2033, while new frontier workers will be subject to a deductible of €10,000. The €10,000 deductible for new frontier workers means that the first €10,000 of working income will not be taxed, while any higher income will be taxed according to Swiss tax rules. For example, if a frontier earns €20,000 in a working year, only €10,000 will be exempt from taxes, while the remaining €10,000 will be subject to taxation. The new legislation also provides for the possibility of requesting the recognition of work income at the local tax office. This means that frontier workers will be able to apply to be recognised as frontier workers and to be exempt from labour income taxes. The municipalities of Lugano, Bellinzona and Locarno are already ready to implement the new legislation. The City of Lugano, for example, has already established an office dedicated to the recognition of frontier workers and the application of the €10,000 deductible. The new legislation also has an operational checklist for border workers: - Check the €10,000 deductible and Swiss tax rules - Request recognition of employment income at

Operational details

New border agreement: what changes for border workers in Ticino? Border workers working in Ticino were affected by a major change with the agreement between Switzerland and the European Union of 17 July 2023. This new agreement has introduced some significant changes for border workers working in Switzerland. ### Implications for frontier workers Frontier workers who have already worked in Switzerland before 17 July 2023 will be exempt from the €10,000 deductible, as established by the Swiss Federal Law of 2022. This means that they will not have to pay taxes on the first 10,000 euros of income earned in Switzerland. New frontier workers, on the other hand, will have to pay the same taxes and contributions in Switzerland as Swiss citizens. This means that they will have to pay taxes on their income earned in Switzerland, including income taxes and property taxes. * Border workers must submit a tax return in Switzerland and Italy, as established by the 2019 Italian law. This means that they will have to declare their income earned in Switzerland and Italy, and pay the related taxes. ### Concrete examples For example, if a frontier worker earns 50,000 euros in Switzerland per year, and has already worked in Switzerland before July 17, 2023, they will not have to pay taxes on the first 10,000 euros of income. However, if you are a new frontier worker, you will have to pay taxes on your income earned in Switzerland, including taxes on

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Key points

Action Border workers must submit their tax return in Switzerland and Italy by 31 March of each year, as required by the bilateral agreement between the two nations. Border workers will have to pay the same taxes and contributions in Switzerland as Swiss citizens, according to the legislation in force (Direct Federal Tax Act of 20 December 1990, Article 8). Border workers can consult the AFC/ESTV website for more information on tax reporting and contributions. ### Contributions in Switzerland Border workers will have to pay contributions for unemployment (LAV) and pension (AVS) insurance in Switzerland, just like Swiss citizens. According to Article 6 of the Unemployment Insurance Act (LAV) of 18 March 1989, frontier workers will have to pay a monthly contribution of about CHF 190. In addition, frontier workers will have to pay a pension contribution (AVS) of approximately 3.2% of their annual income, as required by Article 14 of the Old Age and Disability Insurance Act (AVS) of 25 September 1952. ### Taxes in Switzerland Border workers will have to pay the same taxes in Switzerland as Swiss citizens, according to the legislation in force (Direct Federal Tax Act of 20 December 1990, Article 8). According to Article 8 of the Direct Federal Tax Act, border workers will have to pay a direct federal tax of 4.5% of the

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Source: orphan