With the entry into force of the Omnibus Decree 2024, some important changes have been introduced regarding the taxation of cross-border workers between Switzerland and Italy.
These new rules apply both to new cross-border comers and to so-called “old cross-border comers”, providing for a system of competing taxation and new tax breaks.
In this guide, we will see who cross-border workers are, how taxation changes in 2024 and what’s new for this category of workers.
Who are frontier workers?
Frontier workers are those who reside in a municipality located within a 20 kilometer range from the border with another State and work in the border area of the other country, returning daily to their State of residence. This definition is provided for by Law no. 83 of 13 June 2023, which ratifies the agreement of 23 December 2020 between Italy and Switzerland
.
The agreement regulates the tax regime for cross-border commuters, establishing who falls into this category and to what extent they must be taxed both in Switzerland and in Italy.
What will change in 2024 for cross-border commuters in Switzerland?
Starting from 2024, with the Omnibus Decree 2024 and the integrated amendments, concurrent taxation became effective for cross-border workers. In particular, Italian workers hired since July 1, 2023 in Switzerland are subject to taxation both in the country of work and in the country of residence.
Here are the main news:
- Concurrent taxation: The incomes of frontier workers will be taxed at 80% in Switzerland and 20% in Italy. This regime applies to new cross-border commuters, i.e. those who started working in Switzerland on 1 July 2023
- Replacement tax: A replacement tax of 25% has been introduced on taxes already paid in Switzerland. This tax has been increased compared to the initial proposal by 4%, to make taxation more progressive based on
- Old cross-border commuters: Cross-border workers who were already working in Switzerland before 1 July 2023 will continue to be taxed exclusively in Switzerland, even in the event of a change of job, as long as they remain in Swiss territory.
.
income.
Tax regime for cross-border commuters
Concurrent taxation requires that income from work in Switzerland is taxed for a part in Switzerland and for the rest in Italy. However, the agreement also includes tax breaks to reduce the impact of double taxation
:
- Tax credit: Italian cross-border commuters can benefit from a tax credit for taxes already paid in Switzerland, thus avoiding double taxation.
- Tax deductible: In 2024, the tax exemption for Italian cross-border commuters was increased to 10,000 euros. This means that the first 10,000 euros of income will not be subject to taxation in Italy
.
Difference between new and old cross-border commuters
The new cross-border commuters are those who started working in Switzerland after July 1, 2023. For these workers, taxation will be concurrent, as
explained above.
Old cross-border commuters, on the other hand, are those who were already working in Switzerland before July 1, 2023. These workers will continue to be taxed exclusively in Switzerland until they retire, even if they change jobs
.
Replacement tax for cross-border commuters
For cross-border commuters resident in the new border municipalities, there is a replacement tax of 25%, which replaces ordinary taxation. This regime applies to frontier workers who reside in Italy and work in the Swiss cantons of Ticino, Valais or Graubünden
.
List of border municipalities
Cross-border workers resident in Italian border municipalities are those who reside within 20 kilometers of the Swiss border and work in one of the Swiss border cantons (Ticino, Graubünden, Valais). This list of border municipalities was updated in 2020 and includes new locations, expanding the number of residents that can benefit from the
special tax regime.
The new tax rules introduced in 2024 for Swiss-Italy frontier workers bring important changes, especially for new cross-border comers, who will be subject to competitive taxation. Old cross-border commuters, on the other hand, will continue to benefit from the exemption
from taxation in Italy.