Categories: World

Italian MEPs approve cross-border commuting

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A new agreement for frontier workers replaces the previous agreement from 1974.

The Italian Chamber of Deputies on Thursday approved the new agreement on cross-border commuting between Switzerland and Italy. The ratified agreement replaces the previous agreement of 1974 and is mainly intended to prevent double taxation.

In a vote in the Italian Chamber of Deputies in Rome, 239 of a total of 400 MPs voted in favor of the agreement. There was no opposition. Due to editorial changes, the agreement now has to go back to the Senate, the smaller of the two chambers of the Italian parliament. The Senate had previously approved the agreement in early February. The Swiss parliament approved the agreement in March 2022.

Keep 80 percent of the withholding tax

Under the agreement, Switzerland should be able to withhold 80 percent of the withholding tax on the income of Italian border commuters. The new cross-border commuters must also be properly taxed in their country of residence, and the country of residence must avoid any double taxation.

In return, Switzerland wants to pay the Italian border communities a financial compensation of 40 percent of the withholding tax it levies. The current cross-border commuter agreement states that cross-border commuters are taxed only in Switzerland, with Italy entitled to 38.8 percent of the withholding tax.

The new agreement redefines who is considered a cross-border commuter. They are workers who live less than twenty kilometers from the border and in principle return home every day. From the entry into force of the Agreement, this definition will apply to all new cross-border commuters and to those covered by the current Regulation.

Transitional arrangement planned

23 percent of border commuters in Switzerland come from Italy. Every day, about 77,000 Italian workers cross the Swiss border into the Canton of Ticino, and there are about 90,000 Italian border commuters in total. Most come from Lombardy.

A transitional arrangement should apply to people who work or have worked in the cantons of Ticino, Graubünden and Valais between the end of December 2018 and the date of entry into force of the text – the so-called current cross-border commuters. Those cross-border commuters will thus remain subject to taxation exclusively in Switzerland until the end of the 2033 tax year.

The governments of the two countries signed the agreement in December 2020 after many years of negotiations. The agreement was largely unchallenged in the Swiss parliament.

The SVP had tried to suspend the deal until Italy removed Switzerland from its 1999 list of tax havens. Last April, the governments of both countries announced that Italy would remove Switzerland from the list.

The list mandated a reversal of the burden of proof for tax residency for persons moving from Italy to Switzerland. Those affected had to prove that they had moved their life center to Switzerland. (SDA)

Source: Blick

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