Moving to Saarland from border crossings: pros and cons (cross-border guide)

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Tax at source in Switzerland for frontier workers.
• New deductible of €10,000 for new frontier workers.
• €7,500 exemption for old border workers until 2033.

The New Frontier Agreement was signed on 23 December 2020 and ratified by Law 83 of 13 June 2023.

The Italy-Switzerland Double Taxation Convention was signed on 9 December 1976.

What's changed

With the entry into force of the New Frontier Agreement, border workers in Ticino will have to adapt to new tax rules. The main novelty is the Swiss Source Tax, which replaces the current tax regime in Italy. This change could have a significant impact on border workers working in Ticino, especially if they are not familiar with the new Swiss tax rules.

Concrete examples

Let's imagine we have a border worker who works in Lugano and earns €50,000 per year. Previously, he would have had to pay the tax in Italy, but now he will have to pay the tax in Switzerland. The new €10,000 deductible means you can earn up to €20,000 without paying any taxes. However, if you earn more than €20,000, you will have to pay tax in Switzerland on the excess income.

Operational Checklists

For border workers working in Ticino, it is important to consider the following points:

• Check your tax situation and understand if you are subject to Tax at Source

Operational details

Practical analysis

• Border crossers will benefit from an exemption of €7,500 or a deductible of €10,000.
• Tax at source in Switzerland for frontier workers increases expenses for frontier workers.
• The new €10,000 allowance for new frontier workers is a support measure for new frontier workers.
• The exemption of €7,500 for old border workers until 2033 is a support measure for old border workers.
• The deductible of €10,000 for new frontier workers is equivalent to about CHF 14,000, which means that frontier workers will be able to earn about CHF 14,000 without being taxed.
• Border workers will benefit from the new €10,000 allowance even if they have already worked in Switzerland for less than a year.
• The exemption of €7,500 for old frontier workers until 2033 means that frontier workers can earn up to €7,500 without being taxed.

Key facts

• What: New Frontier Agreement.
• When: 1 January 2024.
• Where: Switzerland.
• Who: Ticino-Italy border guards.
• Amount: €7,500, €10,000.

Concrete examples

• A border worker who has been working in Switzerland for 6 months earns CHF 4,000 per month. If we apply the €10,000 deductible, the border worker will be able to earn CHF 14,000 without being taxed.
• A border worker who has been working in Switzerland for 2 years earns CHF 4,000 per month. If we apply the exemption of €7,500, the border worker will be able to earn CHF7,500 without being taxed.

Operational Checklists

• Check if

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Key points

Action

• Frontier workers must check if they are eligible for the exemption of €7,500 or for the deductible of €10,000.
• Frontier workers should inquire about tax at source in Switzerland and the changes made by the New Frontier Agreement.
• Frontier workers must plan their expenses and earnings based on the changes made by the New Frontier Agreement.
• It is advisable to consult the website of the Ticino Canton Employment Office for up-to-date information on the new rules.

Concrete examples

• A border worker who finds himself in a similar situation could check if he is eligible for the exemption of €7,500 or for the deductible of €10,000.
• A border worker earning CHF 40,000 per year in Switzerland may be eligible for the €7,500 exemption if he/she has accommodation costs of CHF 20,000 in Switzerland.
• A frontier worker earning CHF 60,000 per year in Switzerland may be eligible for the €10,000 deductible if he/she has accommodation expenses of CHF 30,000 in Switzerland.

Operational Checklists

• Check if you are eligible for the exemption of €7,500 or for the deductible of €10,000.
• Learn about tax at source in Switzerland and the changes made by the New Frontier Agreement.
• Plan your expenses and earnings based on the changes made by the New Frontier Agreement.
• Check the website of the Ticino Canton Employment Office for up-to-date information on the new rules.

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