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Switzerland, Italy Working To Remedy Tax Disputes

by Ulrika Lomas, Tax-News.com, Brussels

31 July 2014


Swiss President Didier Burkhalter has called for a constructive, coherent, and balanced approach to the resolution of a number of outstanding tax issues with Italy.

Burkhalter made the comments during a meeting with Matteo Renzi, Italy's Prime Minister, after discussing Italy's presidency of the European Union.

Turning to bilateral matters, they agreed to hold technical discussions to negotiate a three-point package of measures on outstanding tax cases, the exchange of information and blacklists, and the issue of taxing cross-border commuters.

In May, Swiss Finance Minister Eveline Widmer-Schlumph announced that negotiations are underway to improve the nations' cross-border tax agreement. Under the current terms of the 1974 treaty, cross-border Italian workers employed in Switzerland are exempt from taxation in Italy, but Switzerland is required to transfer 38.8 percent of the fiscal revenue collected by the state from these workers to Italy.

Switzerland wants to raise taxes on Italian cross-border workers as the lower rates in Switzerland are attracting significant numbers of workers from Italy. Those living no more than 20 kilometers from the Swiss border would be subject to Italian tax. Negotiations were launched after the Swiss canton Ticino requested that the agreement be scrapped, stating that it is lowering wages for Swiss workers. Widmer-Sclumph has ruled out scrapping the agreement in favor of its renegotiation.

TAGS: tax | double tax agreement (DTA) | employees | agreements | tax planning | tax rates | Italy | Switzerland | tax breaks | tax reform

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