Moving to Sondalo as a cross-border commuter: pros and cons (cross-border guide)

Context

In short

• The New Cross-Border Agreement was signed on 23 December 2020 and entered into force from 1 January 2024.
• Italy avoids double taxation with the tax credit (EC framework of 730).

Key facts

• What: New Cross-Border Agreement
• When: 23 December 2020
• Where: Grisons, Sondalo
• Who: Cross-border workers
• Amount: €7,500 for exempted workers (old cross-border workers), €10,000 for new cross-border workers

The New Cross-border Workers Agreement provides for exemption from paying withholding tax for cross-border workers, with a limit of €7,500 for old cross-border workers and €10,000 for new cross-border workers. This agreement was signed on December 23, 2020 and entered into force on January 1, 2024.

Pros and cons of the New Cross-Border Agreement

Pro

• Exemption from withholding tax for cross-border workers can reduce their tax burden and increase their financial availability.
• The tax credit (EC framework of 730) avoids double taxation and allows cross-border workers to avoid paying tax in Italy and Switzerland.
• The New Cross-Border Agreement can encourage worker mobility between Italy and Switzerland, promoting economic growth and the development of the labor market.

Cons

• The New Cross-Border Agreement may lead to a reduction in tax revenues for the Italian State and Switzerland.
• The lack of clear and unambiguous regulations can create confusion and doubts among cross-border workers and tax authorities.
• The limit of €7,500 for old cross-border workers and €10,000 for new cross-border workers may be considered too low to cover the tax burdens of cross-border workers.

…

Operational details

The exemption from paying withholding tax is €10,000 for new cross-border commuters, while for old cross-border commuters it is €7,500. This means that new cross-border workers can move to Sondalo without paying withholding tax, while old cross-border workers have to pay tax on their wages.

The free trade agreement between Switzerland and the European Union provides for exemption from withholding tax for cross-border workers who transfer their residence to Switzerland. This treaty was signed on June 21, 1972 and entered into force on May 1, 1973.

However, it is important to note that withholding tax exemption is not automatic and requires a number of conditions. Cross-border commuters must submit a declaration of transfer of residence and must be able to demonstrate that they have actually transferred their residence to Switzerland.

Concrete example: if an Italian cross-border worker transfers his residence to Bellinzona, he could be exempt from withholding tax if he has an annual income of €50,000 and has presented the declaration of transfer of his residence.

In case of transfer of a German cross-border worker to Lugano, he could be exempt from withholding tax if he has an annual income of €60,000 and has presented the declaration of transfer of his residence.

It is important to note that exemption from withholding tax is not automatic and requires a number of conditions. Cross-border commuters must submit a declaration of transfer of residence and must be able to demonstrate that they have actually transferred their residence to Switzerland.

…

Key points

If you are a cross-border worker who works in Grisons and resides in Sondalo, it is important to consider the advantages and disadvantages of moving to Sondalo. The New Cross-border Workers Agreement provides for exemption from paying withholding tax for cross-border workers, with a limit of €7,500 for old cross-border workers and €10,000 for new cross-border workers.

Advantages

• Tax exemption: Without the exemption, you would have to pay withholding tax on your income, which could be an additional burden.
• More job opportunities: By working in Switzerland, you may have access to more job and career opportunities.
• Lower tax burden: if you are a cross-border commuter, you may be exempt from paying property tax.

Disadvantages

• Life change: moving to Sondalo could mean changing your life, habits and relationships.
• Moving costs: You may face moving costs, such as buying a new home or enrolling in public services.
• Regulations and regulations: You should be aware of regulations and regulations that may affect your move, such as immigration law.

Concrete examples

• Imagine working as a mechanic in a workshop in Sondalo and receiving a monthly salary of €4,500. If you were not exempt from the tax, you would have to pay withholding tax of around €800 per month. With the exemption, you could save this amount and use it for other purposes.
• If you are a cross-border worker working as a teacher in a school in Sondalo and earning €6,000 a month, you may be exempt from property tax, which could reduce your tax burden.

…