The omnibus decree, published in the Official Gazette on 9 August 2024, introduced important changes for the taxation of frontier workers operating between Switzerland and Italy. This decree absorbed the provisions of the DDL on frontier workers approved by the Council of Ministers on 24 June 2024, which concerned teleworking and an optional tax regime for so-called ‘old cross-border workers’. In this guide, we will explore in detail who cross-border workers are, the changes introduced in 2024 and what changes for them at the tax and social security level
.
Table of Contents:
Who are frontier workers
A frontier worker is a natural person resident fiscally in a municipality located within 20 kilometers of the border with another State, who carries out an employee activity in the border area of the other State and returns daily to their State of residence. This definition is established by law no. 83 of 13 June 2023, which ratifies the agreement of 23 December 2020 between Italy and Switzerland
.
News for cross-border commuters in 2024
With the omnibus decree of 2024, published in the Official Gazette on 9 August 2024, significant changes were introduced to the taxation regime for frontier workers. In fact, since 2024, a new agreement has come into force between Switzerland and Italy that introduces the concurrent taxation of income from work, dividing the tax burden between the two countries
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- Competitive taxation: since 2024, Italian cross-border commuters hired after July 1, 2023 are taxed at 80% in Switzerland and 20% in Italy.
- replacement tax: a 25% replacement tax has been introduced on taxes already paid in Switzerland for Italian frontier workers. This tax also applies to “old cross-border commuters” and to residents of the new border municipalities in the provinces of Brescia
- Derogations and incentives: workers who opt for the replacement tax cannot deduct taxes already paid in Switzerland from Italian taxes, but it is possible to deduct 20% of the social security contributions paid.
25%
and Sondrio.
Taxation of cross-border commuters in Switzerland
The taxation of frontier workers in Switzerland, according to the law of 13 June 2023, n. 83 and the cross-border bill of 2024, works according to these rules:
- Competitive taxation: Italian cross-border commuters pay 80% of taxes in Switzerland and 20% in Italy.
- Non-tax exemption: since 2024, the non-tax exemption has been increased from 7,500 euros to 10,000 euros.
- Old cross-border commuters: they continue to be taxed exclusively in Switzerland, with financial compensation in favor of Italian border municipalities until 2033.
Example of taxation for a frontier worker
To clarify how taxation works for frontier workers, let’s take an example:
A frontier worker with a gross income of 120,000 euros, resident in Cernobbio and employed in Mendrisio, will be taxed as follows:
- The tax in Switzerland, reduced to 80%, will result in 14,400 euros.
- In Italy, the remaining income will be taxed according to the Italian personal income tax brackets, with a tax credit for taxes paid in Switzerland.
List of border municipalities in 2024
The 2024 Border Bill announces the list of municipalities valid in 2024. Law no. 83 of 13 June 2023 clarifies that the border area for Italy includes the autonomous provinces of Bolzano, the regions of Lombardy, Piedmont and Valle d’Aosta, while for Switzerland it includes the cantons of Graubünden, Ticino
and Valais.
Conclusion
The changes introduced in 2024 for cross-border workers between Italy and Switzerland mark a significant change in the tax and social security regime applied to this category of workers. It is essential that cross-border commuters learn about and understand how these changes will affect their income and taxes
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