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Switzerland, Italy Agree Tax Deal For Cross-Border Workers

by Ulrika Lomas, Tax-News.com, Brussels

23 December 2015


Switzerland and Italy have initialed an agreement on the taxation of cross-border workers.

Under the agreement, the term "frontier worker" will cover those taxpayers that live within 20 kilometers of a border and who, in principle, return on a daily basis to their state of residence. In the case of Switzerland, "frontier areas" are the cantons of Graubünden, Ticino, and Valais, and, in the case of Italy, the regions of Lombardy, Piedmont, Valle d'Aosta, and Provincia Autonoma di Bolzano.

Employees will pay up to 70 percent of the income tax that would ordinarily apply to employment income in the state where they work. The state of residence will continue to levy personal income taxes but will avoid double taxation.

Information will be exchanged on the employment income of frontier workers, and the agreement will be reviewed every five years.

With regards to the Italian commune of Campione d'Italia, Italy and Switzerland will set up a joint committee to negotiate a comprehensive solution covering fiscal and non-fiscal issues. The Swiss Government said they have so far explored a number of possible pragmatic solutions covering indirect tax issues. With the aim of finding a solution by summer 2016, negotiations will continue in the next few months on two possible solutions: a lump-sum refund, or a limited traceable ad valorem quota of goods not subject to indirect taxation (VAT, excises, and duties collected by customs).

TAGS: tax | double tax agreement (DTA) | value added tax (VAT) | employees | agreements | Italy | Switzerland | individual income tax

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