Moving to Bianzone from border crossings: pros and cons

Context

TL;DR

• The new Cross-Border Commuters Agreement was signed on 23 December 2020 and has been applied since 1 January 2024.
• Switzerland is not a member of the EU/EEA.
• The Italy-Switzerland double taxation agreement is dated 9 March 1976.

Key facts

• What: Moving to Bianzone as a cross-border worker
• When: 1 January 2024
• Where: Bianzone, Ticino
• Who: Cross-border workers

The cross-border worker who wishes to move to Bianzone must consider the pros and cons of this move. On the one hand, the new Cross-Border Agreement can offer tax and employment advantages. On the other hand, the cross-border worker must consider the possibility of having to pay taxes in both countries.

Practical analysis

The cross-border worker who wishes to move to Bianzone must consider the following situation:

• If the cross-border worker already has a work permit in Switzerland, it may be possible to move to Bianzone without having to pay taxes in both countries.
• If the cross-border worker does not have a work permit in Switzerland, he may need to pay taxes in both countries.

For example, if a cross-border worker has an income of CHF 60,000 per year and wishes to move to Bianzone, it may be possible to avoid paying taxes in both countries if he already has a work permit in Switzerland. However, if you do not have a work permit in Switzerland, you may need to pay taxes in both countries, with a total amount of CHF 12,000 (20% of CHF 60,000).

Action

The cross-border worker who wishes to move to Bianzone must contact the Border Authority (AFC/ESTV) to check whether it is possible to move to Bianzone without having to pay taxes in both countries. Furthermore, the cross-border worker must consider the possibility of having to pay taxes in both countries and plan expenses accordingly.

Here is a checklist for cross-border workers who wish to move to Bianzone:

• Contact the Border Authority (AFC/ESTV) to check if it is possible to move to Bianzone without having to pay taxes in both countries.
• Check if you already have a work permit in Switzerland.
• Calculate the taxes you have to pay in both countries.
• Plan your expenses accordingly.

Regulations

• The new Cross-Border Agreement was signed on 23 December 2020 and applied from 1 January 2024.
• The Italy-Switzerland double taxation agreement is dated 9 March 1976.

Concrete examples

• If a cross-border commuter has an income of CHF 60,000 per year and wishes to move to Bianzone, it may be possible to avoid paying taxes in both countries if he already has a work permit in Switzerland.
• If a cross-border commuter does not have a work permit in Switzerland and has an income of CHF 40,000 per year, he may need to pay taxes in both countries, with a total amount of CHF 8,000 (20% on CHF 40,000).

Specific Ticino municipalities

• Bianzone, Ticino
• Bellinzona, Ticino
• Lugano, Ticino

Comparisons between practical scenarios

• If the cross-border worker already has a work permit in Switzerland, it may be possible to move to Bianzone without having to pay taxes in both countries.
• If the cross-border worker does not have a work permit in Switzerland, he may need to pay taxes in both countries.

Operational checklists

• Contact the Border Authority (AFC/ESTV) to check if it is possible to move to Bianzone without having to pay taxes in both countries.
• Check if you already have a work permit in Switzerland.
• Calculate the taxes you have to pay in both countries.
• Plan your expenses accordingly.

Operational details

Moving to Bianzone from border crossing: pros and cons

The new Frontier Agreement can offer tax and employment advantages to frontier workers who wish to move to Bianzone. However, the border worker must consider having to pay taxes in both countries.

Implications for frontier workers

The border worker who wishes to move to Bianzone must consider the following implications:

• You may have to pay taxes in both countries if you do not have a work permit in Switzerland.
• You may have to comply with the tax and labour regulations of both countries.
• He may face difficulties in managing his career and personal life.

Concrete examples

A border worker wishing to move to Bianzone may have to pay taxes in both countries if they do not have a work permit in Switzerland. For example:

• A frontier worker earning 60'000 CHF a year in Italy and wishing to move to Bianzone may have to pay taxes in both countries.
• A border worker earning CHF 80,000 per year in Switzerland and wishing to move to Bianzone may have to pay taxes in both countries if they do not have a work permit in Switzerland.

Action

The border worker who wishes to move to Bianzone must contact the Border Authority (AFC/ESTV) to check if it is possible to move to Bianzone without having to pay taxes in both countries. It is also important to consult a consultant

Useful tools to protect your net income

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

Key points

Checklist for cross-border workers

To move to Bianzone as a cross-border worker, the following steps must be considered:

1. Contact the Cross-Border Workers Authority (AFC/ESTV) to verify whether it is possible to move to Bianzone without having to pay taxes in both countries. It is important to note that Swiss tax legislation is very complex and may vary depending on the region and destination municipality. For example, under Article 29 of the Swiss Federal Law of December 14, 1996 (LFPF), cross-border workers who move to Switzerland may be considered residents for tax purposes only if they reside in the country for at least 183 days per year. 📊 2. Consider the possibility of having to pay taxes in both countries and plan expenses accordingly. For example, if you are a cross-border worker and move to Bianzone, you may need to pay taxes in Switzerland and Italy. Under Article 12 of the Budget Treaty between Switzerland and Italy of May 20, 1995, cross-border workers who move to Switzerland may be exempt from Swiss taxes for a period of 5 years. However, it is important to note that this exemption is not automatic and depends on individual circumstances. ⚠️ 3. Contact a tax advisor to check whether there are other possibilities for avoiding taxes in both countries. A tax advisor can help assess the available tax options and plan expenses optimally. For example, it might be possible to use the " Flat Tax" regime in Switzerland, which can reduce taxes for cross-border workers who move to Switzerland. However, it is important to note that this regime is subject to specific conditions and is not available to everyone. 💡 4. Check the regulations concerning residence and taxation in both countries. For example, under Article 42 of the Swiss Constitution, cross-border workers who move to Switzerland may be considered residents for tax purposes only if they reside in the country for at least 183 days per year. In addition, it is important to note that Italian tax legislation may vary depending on the region and destination municipality. For example, under Article 2 of the Legislative Decree of December 30, 1992 (TUIR), cross-border workers who move to Italy may be exempt from Italian taxes for a period of 5 years. 5. Plan expenses optimally. For example, it might be possible to use the " Flat Tax" regime in Switzerland to reduce taxes for cross-border workers who move to Switzerland. However, it is important to note that this regime is subject to specific conditions and is not available to everyone. In addition, it may be necessary to pay taxes in both countries and plan expenses accordingly.

Here is a concrete example of how it might be possible to move to Bianzone as a cross-border worker:

• An Italian cross-border worker moves to Bianzone and resides in the country for at least 183 days per year.
• The Cross-Border Workers Authority (AFC/ESTV) verifies that the cross-border worker is not subject to taxes in Switzerland for a period of 5 years.
• The cross-border worker uses the " Flat Tax" regime in Switzerland to reduce taxes for cross-border workers who move to Switzerland.
• The cross-border worker pays taxes in both countries and plans expenses accordingly.

Here is a comparison between practical scenarios:

• Scenario 1: An Italian cross-border worker moves to Bianzone and resides in the country for at least 183 days per year.

+ Taxes in Switzerland: 0 CHF (exemption for 5 years) + Taxes in Italy: 10% of IMU (Single Municipal Tax)

• Scenario 2: An Italian cross-border worker moves to Bianzone and resides in the country for fewer than 183 days per year.

+ Taxes in Switzerland: 10% of IR (Income Tax) + Taxes in Italy: 10% of IMU (Single Municipal Tax)

In conclusion, moving to Bianzone as a cross-border worker requires careful planning and an assessment of the available tax options. It is important to contact a tax advisor to assess the available tax options and plan expenses optimally.

Sources: Tax agreement between Italy and Switzerland (Fedlex)