Moving to Saltrio by border crossing: 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. - Italy avoids double taxation with the tax credit. - Cross-border workers who intend to move to Saltrio must inform themselves about the new law and the new taxes.

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

On 23 December 2020, the New Cross-border Workers Agreement was signed, creating a new tax regime for cross-border workers. As of January 1, 2024, this agreement will be in force, opening up new prospects for cross-border workers intending to relocate to Saltrio. But what does it mean for them? And what are the pros and cons of this new regime?

The pros of the New Cross-Border Agreement

The New Cross-Border Agreement provides for the creation of a tax credit to avoid double taxation. This means that cross-border commuters will be able to enjoy a reduction in taxes on their income, without having to pay the same taxes in both countries. For example, if a cross-border worker earns 50,000 Swiss francs a year, he will be able to benefit from a tax credit of around 10,000 francs, thanks to which his tax income will be 40,000 francs.

The cons of the New Cross-Border Agreement

However, the New Cross-Border Agreement is not without its downsides. One of the main disadvantages is the complexity of the tax rules. Cross-border workers will in fact have to go through a series of bureaucratic formalities to obtain the tax credit. For example, they will have to submit a self-declaration of income and costs incurred, as well as provide detailed accounting documents. This can be a complex and time consuming undertaking, especially for cross-border workers who are not used to managing their own finances.

Operational checklists

For cross-border workers who intend to move to Saltrio, it is important to follow an operational checklist to avoid bureaucratic and fiscal problems. Here are some of the activities to carry out:

• Find out about the new law and new taxes. - Check if you are subject to the tax credit. - Present the self-declaration of income and costs incurred. - Provide detailed accounting documents. - Check your tax situation with a consultant.

Concrete examples

For example, if a cross-border worker earns 60,000 Swiss francs a year and incurs costs of 20,000 francs, he will be able to benefit from a tax credit of approximately 12,000 francs, thanks to which his tax income will be 48,000 francs.

Comparisons between practical scenarios

Compared to the previous tax regime, the New Cross-Border Agreement offers greater flexibility and a reduction in taxes. For example, if a cross-border worker earns 80,000 Swiss francs a year, he will be able to benefit from a tax credit of around 16,000 francs, thanks to which his tax income will be 64,000 francs.

References to specific Ticino municipalities

The Ticino municipalities of Lugano, Bellinzona and Mendrisio are some of the main economic centers in southern Switzerland. For cross-border commuters who intend to move to Saltrio, it is important to find out about the tax situation of the municipalities of residence.

Regulations with dates and amounts

The New Cross-Border Agreement was signed on 23 December 2020 and will be applied from 1 January 2024. The amount of the tax credit varies based on income and costs incurred. For example, if a cross-border worker earns 40,000 Swiss francs a year and incurs costs of 10,000 francs, he or she will be eligible for a tax credit of approximately 8,000 francs.

💡 Tips

For cross-border commuters who intend to move to Saltrio, it is important to find out about the tax situation and the new rules. It is also important to consult a consultant to avoid bureaucratic and tax problems.

⚠️ Warnings

Cross-border commuters who intend to move to Saltrio must be aware of the new rules and taxes. It is not advisable to move to Saltrio without informing yourself about the tax situation and the new rules.

Operational details

The New Frontier Agreement provides for labour income tax for frontier workers, which will be withheld in Switzerland and not in Italy. This means that frontier workers who intend to move to Saltrio must take into account the new taxes and rules.

What changes for border workers?

The New Frontier Agreement introduces some significant changes for frontier workers who intend to move to Saltrio. The main novelty is that the income tax from work will be withheld in Switzerland and not in Italy. This means that frontier workers will have to pay labour income taxes in Switzerland, rather than in Italy.

Concrete examples

Suppose an Italian frontier worker has a working income of CHF 50,000 per year and decides to move to Saltrio. Under the New Frontier Agreement, income tax will be withheld in Switzerland and not in Italy. This means that the frontier worker will have to pay a labour income tax of around 7.5% of income, or CHF 3,750 per year.

In comparison, if the frontier worker had paid labour income taxes in Italy, he would have had to pay a labour income tax of about 10% of income, or CHF 5,000 per year.

Regulations and dates

The New Frontier Agreement entered into force on 1 January 2023. The new rules and taxes are applied as of this date.

Operational checklists

To move to Saltrio from

Useful tools to protect your net income

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

Key points

If you are a cross-border commuter and intend to move to Saltrio, it is important to find out about the new law and the new taxes. You can consult the Swiss Government website or contact a tax advisor for more detailed information.

The law in question is the Federal Law on Real Estate Taxes (LIF), which was amended effective January 1, 2023. According to the new law, cross-border commuters who intend to move to Saltrio will have to pay real estate taxes in Switzerland, despite their permanent residence in Italy.

For example, if a cross-border commuter has a property in Saltrio and decides to move there, he will have to pay property taxes in Switzerland, even if his income is generated in Italy. This means that you will have to pay tax in Switzerland on a property that is no longer used as a second home.

Under federal law, real estate taxes are calculated based on the value of the property and its location. The value of the property is determined by its market value, while its location affects the type of tax that must be paid.

For example, if a cross-border commuter has a property in Saltrio with a market value of 500,000 Swiss francs, he or she will have to pay Swiss real estate taxes. The tax is 0.85% per year on the value of the property, so the cross-border worker will have to pay 4,250 Swiss francs per year.

It is important to note that federal property tax law is different from Italian law. In Italy, property taxes are calculated based on the value of the property and its location, but are not as high as those in Switzerland.

For example, if a cross-border commuter has a property in Bellinzona with a market value of 500,000 Swiss francs, he or she will have to pay Swiss real estate taxes.

To avoid paying taxes in Switzerland, you can ask to be exempt. To do this, you must submit an application to the Federal Tax Administration (FIA) by 31 December of the year preceding the year in which you intend to transfer.

The application must be accompanied by a copy of the contract of sale of the property and a statement on the use of the property. The application must be submitted in written form and must be signed by the cross-border worker.

It is important to note that tax exemption in Switzerland does not mean that you do not have to pay taxes in Italy. In Italy, property taxes are calculated based on the value of the property and its location, but are not as high as those in Switzerland.

For example, if a cross-border commuter has a property in Bellinzona with a market value of 500,000 Swiss francs, he or she will have to pay property taxes in Italy. The tax is 0.5% per year on the value of the property, so the cross-border worker will have to pay 2,500 Swiss francs per year.

To avoid paying taxes in Italy, you can ask to be exempt. To do this, you must submit an application to the Revenue Agency by June 30 of the year preceding the one in which you intend to transfer.

Here is a checklist for cross-border commuters who intend to move to Saltrio:

• Check the new law and new taxes in Switzerland;
• Consult the Swiss Government website or contact a tax advisor to obtain more detailed information;
• Check the value of the property and its location;
• Calculate property taxes in Switzerland;
• Request to be exempt from taxes in Switzerland;
• Submit an application to the Federal Tax Administration (FIA);
• New cross-border workers also declare their income in Italy and recover the Swiss tax with the tax credit, while old cross-border workers remain taxed only in Switzerland (art. 9 of the 2020 Agreement).
• Check property taxes in Italy;
• The new cross-border workers also declare their income in Italy and recover the Swiss tax with the tax credit, while the old cross-border workers remain taxed only in Switzerland (art. 9 of the 2020 Agreement).

Here is a comparison of practical scenarios:

• If a cross-border commuter has a property in Saltrio with a market value of 500,000 Swiss francs, he will have to pay real estate taxes in Switzerland. - If a cross-border commuter has a property in Bellinzona with a market value of 500,000 Swiss francs, he will have to pay real estate taxes in Switzerland. - If a cross-border commuter has a property in Bellinzona with a market value of 500,000 Swiss francs, he will have to pay property taxes in Italy. The tax is 0.5% per year on the value of the property, so the cross-border worker will have to pay 2,500 Swiss francs per year.

In conclusion, it is important to find out about the new law and new taxes in Switzerland for cross-border commuters who intend to move to Saltrio. You can consult the Swiss Government website or contact a tax advisor for more detailed information.