Teleworking for cross-border commuters: what changes (cross-border guide)

Context

In brief

• The New Cross-Border Commuter Agreement was signed on 23 December 2020 and enters into force on 1 January 2024.
• The new agreement provides for the creation of a transitional regime for old cross-border commuters.
• New cross-border commuters will have a deductible of €10,000.

What changes for cross-border commuters

The new cross-border agreement introduces numerous innovations that could affect the lives of thousands of cross-border commuters living and working in Switzerland. The first novelty is the creation of a transitional regime for old cross-border commuters. Cross-border commuters who have been residing in Switzerland for more than 10 years will have the choice between two options: continue to pay Swiss taxes or opt for the new €10,000 deductible.

Concrete examples

Let's imagine that we have a cross-border worker who resides in Lugano and works in Milan. Currently, cross-border commuters would pay taxes in Switzerland and Italy. With the new agreement, the cross-border commuter could opt for the €10,000 deductible and pay only taxes in Italy. This could mean savings of around €5,000 per year.

Operational checklists

To benefit from the new cross-border agreement, cross-border commuters must meet the following conditions:

• Have resided in Switzerland for at least 10 years
• Have an annual income of at least €20,000
• Work in Italy
• Opt for the €10,000 excess by 31 December 2024

Policies and dates

The New Cross-Border Commuters Agreement was signed on 23 December 2020 and enters into force on 1 January 2024. Cross-border commuters must opt for the €10,000 deductible by 31 December 2024.

Comparisons between practical scenarios

Here's a comparison of two practical scenarios:

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Operational details

Key Facts

• What: New Cross-Border Commuter Agreement
• When: December 23, 2020
• Where: Switzerland
• Who: Cross-border commuters
• Amount: €10,000 (deductible for new cross-border commuters)

Teleworking for cross-border commuters: what changes

With the border agreement of 23 December 2020, Switzerland introduced new rules for cross-border teleworkers. This agreement aims to make life easier for workers who move from their home country to work in Switzerland.

New rules for cross-border commuters

• Deductible: New cross-border commuters can enjoy an exemption of €10,000 for transport and accommodation costs in Switzerland.
• Residence permit: Cross-border commuters can obtain a residence permit for work, which allows them to work in Switzerland for a fixed period of time.
• Taxes: Cross-border commuters are subject to Swiss taxes, but can enjoy a reduction in taxes if they reside in Switzerland for more than 183 days a year.

Concrete examples

• A cross-border commuter working as an engineer in a company in Geneva can enjoy the €10,000 exemption for transport and subsistence costs.
• A worker who works as a cook in a restaurant in Lucerne can obtain a residence permit for work and work in Switzerland for a fixed period of time.

Operational checklists

• Check if you are a cross-border commuter and if you can enjoy the €10,000 deductible.
• Contact your local immigration office to obtain a residence permit for work.
• Check the taxes you have to pay in Switzerland and whether you can enjoy a tax reduction.

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Key points

Teleworking for cross-border commuters: what changes

The New Cross-Border Commuters Agreement introduces a transitional regime for old cross-border commuters, who will have the option of choosing between the new legislation or the old regime. New cross-border commuters, on the other hand, will have a deductible of €10,000. This means that they will not pay withholding tax for the first €10,000 of earned income. It is important to note that the new agreement does not eliminate double taxation, but it does prevent cross-border commuters from paying the tax twice.

The new legislation provides for fairer taxation for cross-border commuters. For example, a cross-border worker earning €40,000 in Switzerland and €30,000 in Italy, could only be taxed on income earned in Switzerland, i.e. €20,000, thanks to the €10,000 deductible and the exemption for the first €10,000. This way, you will not pay withholding tax on 50% of your income.

New cross-border commuters will have to fill out a specific form to request the €10,000 deductible. This form must be sent to the financial directorate of the canton of residence by 31 March of the following year. It is important to note that the €10,000 deductible is only applicable to cross-border commuters who earn an earned income of at least €20,000 per year.

The New Cross-Border Commuter Agreement entered into force on 1 January 2024. It is important for all cross-border commuters to inform themselves about the new requirements and regulations to avoid paying unnecessary taxes. In addition, it is advisable to consult a tax advisor to get a clear view of your situations and to avoid making mistakes.

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