Official New Agreement for Frontier Workers Italy - Switzerland, now in the Official Gazette
14 Jul , 2023 - Fiduciaria Lago
On 30 June 2023, the new bill was published in the Official Gazette and it became official on 1 July 2023. The New Agreement for Frontier Workers Italy-Switzerland is now a reality.
The agreement entered into force on 17 July 2023 and the new provisions will be applicable from 1 January 2024.
Therefore, those who entered the cross-border labor market after 17 July 2023 are considered new frontier workers.
Situation before 17 July 2023 of Italian frontier workers in Switzerland
All Italian frontier workers residing within 20 km of the border had their employment income taxed exclusively in Switzerland.
While Italian frontier workers who reside more than 20 km from the border are taxed both in Switzerland and in Italy, with the right to an exemption of 7,500.00 euros and credit in Italy for taxes paid in Switzerland.
Current situation of Italian frontier workers in Switzerland with the law ratifying the new Agreement
With the entry into force of the law ratifying the new Agreement, the distinction between New Frontiers and Old Frontiers applies:
These are workers who, between 31 December 2018 and the date of entry into force of the new Agreement, carry out or have carried out work as an employee in Switzerland for a Swiss employer, for which the 1974 Agreement remains valid and the income of border is therefore only taxable in Switzerland.
In particular, they are those who in the aforementioned reference period have or had the following characteristics:
- Tax residency in the border Municipalities
- Daily return between Italy and Switzerland
- Employer in Ticino, Grisons or Valais
These are the people who will enter the Swiss labor market as cross-border commuters from the date of entry into force of the New Agreement, to whom concurrent taxation will be applied. That is, in Switzerland they will be taxed with a tax not exceeding 80% of taxes (including local taxes) and in Italy they will have to declare their income (excess of € 10,000.00), while the taxes paid in Switzerland will be offset.
However, thanks to the action of the union, some concessions have been introduced which will lower the Italian IRPEF and improve some social benefits.
Out-of-boundary frontier workers
Frontier workers already operating in Switzerland but who do not have tax residence within 20 km of the border will continue to declare their income in Italy, but they too will be able to enjoy some better conditions obtained from the trade unions, including:
- Increase of the tax deductible from €7,500.00 to €10,000.00
- Possibility of deducting contributions paid for early retirement from taxable income
- Deductibility of Swiss family allowances
In the coming days, a complete document will be released by the Unions with all the details of each point revised by the decree, including answers to the most frequently asked questions.
Switzerland soon out of the Italian black list
Among the novelties of the new ratification law is the appendix concerning the elimination of Switzerland from the Italian black list. This important change also brings benefits in terms of sanctions for tax monitoring violations by Italian residents. On 20 April 2023, Switzerland and Italy signed an agreement to eliminate Switzerland from being a non-cooperative country. The process is currently in progress.
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