Moving to Domaso by border crossing: pros and cons

Context

TL;DR

• The New Cross-Border Agreement was signed on 23 December 2020.
• The new agreement is applied from 1 January 2024.
• Cross-border workers who move to Domaso can enjoy a series of advantages.

The New Cross-border Workers Agreement was signed on 23 December 2020 and provides a series of advantages for cross-border workers who move to Domaso. The new agreement is applied from 1 January 2024.

What is the New Cross-Border Agreement?

The New Cross-Border Agreement is an international agreement signed between Switzerland and Italy on 23 December 2020. This agreement aims to simplify the procedures for transferring cross-border workers between the two countries. The new agreement comes into force from 1 January 2024 and replaces the previous agreement.

Advantages for cross-border commuters

Cross-border workers who move to Domaso can enjoy a series of advantages, including:

• Access to the labor market: cross-border workers can access the Swiss labor market without needing a residence permit.
• Right to work: cross-border workers have the right to work in Switzerland and can be hired by a Swiss employer.
• Taxes: cross-border commuters are subject to Swiss taxes and can benefit from a tax reduction.
• Social insurance: cross-border workers are entitled to Swiss social benefits, such as medical assistance and pensions.

Concrete examples

Here are some concrete examples of how the New Cross-border Workers Agreement can be useful for cross-border workers who move to Domaso:

• An Italian worker who moves to Domaso can access the Swiss job market without needing a residence permit.
• A Swiss employer can hire an Italian cross-border worker without needing a residence permit.
• An Italian cross-border worker can benefit from a reduction in Swiss tax rates.

Operational checklists

Here is an operational checklist for cross-border workers moving to Domaso:

• Check if you are subject to the New Cross-Border Agreement.
• Check if you have the right to work in Switzerland.
• Check whether you are subject to Swiss tax taxes.
• Check if you are entitled to Swiss social benefits.

Comparisons between practical scenarios

Here are some comparisons between practical scenarios for cross-border workers moving to Domaso:

• Practical scenarios 1: An Italian worker moves to Domaso without having signed the New Cross-border Workers Agreement. In this case, the worker has no right to work in Switzerland and cannot access the Swiss labor market.
• Practical scenarios 2: An Italian worker moves to Domaso and signs the New Cross-border Workers Agreement. In this case, the worker has the right to work in Switzerland and can access the Swiss labor market.

Regulations

Here are some regulations that regulate the New Cross-Border Agreement:

• Federal Border Law: The Federal Border Law regulates the conditions of residence of border crossers in Switzerland.
• Agreement between Switzerland and Italy: the agreement between Switzerland and Italy regulates the conditions of residence of cross-border workers in Switzerland.
• Federal decrees: federal decrees regulate the conditions of residence of cross-border commuters in Switzerland.

References to specific Ticino municipalities

Here are some references to specific Ticino municipalities that may be interesting for cross-border commuters moving to Domaso:

• Domaso: Domaso is a municipality in the Canton of Ticino in Switzerland.
• Bellinzona: Bellinzona is the capital of the Canton of Ticino in Switzerland.
• Lugano: Lugano is a city in the Canton of Ticino in Switzerland.

Amounts

Here are some amounts that may be interesting for cross-border workers moving to Domaso:

• Tax rates: Swiss tax rates can range from 0.5% to 2.5% of the income amount.
• Pension: the Swiss pension can vary from 1,000 to 5,000 CHF per month.
• Social insurance: Swiss social insurance can range from 500 to 2,000 CHF per month.

Operational details

Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). However, it is important to note that 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.

In order to better understand the opportunities and challenges facing cross-border workers moving to Domaso, it is useful to analyse the various aspects of the transfer process.

Benefits

• Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). This means that tax burdens will be reduced, allowing you to save more money for investments or for your own well-being.
• The possibility of enjoying a higher income thanks to the difference in taxation between Switzerland and your country of origin. For example, a frontier worker earning €50,000 in Switzerland could be taxed in Switzerland as €40,000, while in Italy it could be taxed as €60,000.
• The ability to access services and benefits that are not available in your home country. For example, frontier workers can access high-quality health services at competitive prices.

Against

• The excess of €10,000 represents an important limit for new frontier workers. This means that tax burdens will be higher than for border crossers who have previously moved.
• The possibility of having to pay taxes in Switzerland and in your home country. The €10,000 threshold in Article 4 of Italian Law No. 83/2023 applies exclusively to employment income earned continuously and exclusively by Italian residents in a foreign border area or neighbouring country, as referred to in Article 1(175) of Law No. 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax.

Useful tools to protect your net income

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

Key points

Old cross-border workers continue to be taxed only in Switzerland (Article 9 of the 2020 Agreement). It is possible to consult the New Cross-Border Workers Agreement for more information on the benefits and conditions for applying.

Old cross-border workers (Art. 9 of the Agreement) are taxed on their salary only in Switzerland; the €10,000 IRPEF allowance has applied since 2024 to cross-border workers whose income is taxed in Italy. However, it is important to note that this allowance is subject to certain conditions and requirements.

Requirements for exemption

• be a cross-border worker moving to Switzerland;
• have a monthly income of at least CHF 2'500;
• have an employment contract of at least 12 months;
• have stable accommodation in Switzerland;
• be able to prove their identity and residence.

Procedure for exemption

1. Consult the New Cross-Border Workers Agreement: it is possible to consult the New Cross-Border Workers Agreement for more information on the benefits and conditions for applying for the exemption. 2. Request an employment certificate: it is necessary to request an employment certificate from your employer. 3. Gather the evidence: it is necessary to gather all the evidence required to prove your identity and residence. 4.

Concrete examples

• Example 1: Old cross-border workers (Article 9 of the Agreement) are taxed on their salary only in Switzerland; the IRPEF tax-free allowance of 10.000 € applies from 2024 to cross-border workers whose income is taxed in Italy.
• Example 2: Old cross-border workers (Article 9 of the Agreement) are taxed on their salary only in Switzerland; the IRPEF tax-free allowance of 10.000 € applies from 2024 to cross-border workers whose income is taxed in Italy.

Operational checklist

• Identity and residence:

+ prove their identity; + prove their residence;

• Employment contract:

+ have an employment contract of at least 12 months; + have a monthly income of at least CHF 2'500;

• Stable accommodation:

+ have stable accommodation in Switzerland;

• Evidence:

+ gather all the evidence required to prove their identity and residence.

Comparison of practical scenarios

• Scenario 1: Old cross-border workers (Article 9 of the Agreement) are taxed on their salary only in Switzerland; the IRPEF tax-free allowance of 10.000 € applies from 2024 to cross-border workers whose income is taxed in Italy.
• Scenario 2: Old cross-border workers (Article 9 of the Agreement) are taxed on their salary only in Switzerland; the IRPEF tax-free allowance of 10.000 € applies from 2024 to cross-border workers whose income is taxed in Italy.

Regulations

• The transitional regime under Article 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; 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 Article 4 of Law 83/2023 is only the limit for the income referred to in Article 1, paragraph 175, of Law 147/2013, not a general tax-free allowance. AFC fact sheet · Agreement, Article 9 · Normattiva, Article 4.
• Immigration law: immigration law establishes the rules concerning immigration and asylum in Switzerland.

Dates and amounts

• Old cross-border workers continue to be taxed only in Switzerland (Article 9 of the 2020 Agreement).
• CHF 2'500: the minimum monthly income required to obtain the exemption;
• 12 months: the minimum duration of the employment contract required to obtain the exemption.