Swiss minister urges tax hikes for Italy frontaliers

Switzerland needs to change its agreement with Italy over the taxation of cross-border workers to make it less appealing for them to work in the canton of Ticino, Swiss Finance Minister Eveline Widmer-Schlumpf says.

Swiss minister urges tax hikes for Italy frontaliers
Swiss Finance Minister Eveline Widmer-Schlumpf. Photo: Federal Chancellery

Widmer-Schlumpf made the comment during a meeting with the cantonal government of Ticino on Wednesday, broadcaster RTS reported.

The federal cabinet minister said that cross-border workers, known as “frontaliers”, who live in Italy currently pay Swiss tax rates, deducted at source, which are lower than those paid in their home country.

If they were forced to pay Italian taxes this would make it less attractive for frontaliers, she said, according to the RTS report.

Over the long term, frontaliers living in Italy should only pay Swiss taxes if their homes are within 20 kilometres of the Swiss border, Widmer-Schlumpf said.

All other frontaliers living in Italy would be taxed at Italian rates under such a scheme, which is currently being negotiated with Italy, she said.

Citizens in Italian-speaking Ticino voted heavily in favour of immigration quotas in the February 9th federal referendum.

Concerns have been raised about the rapid increase in frontaliers, exacerbated by the relatively cheap cost of living in European countries bordering Switzerland.

 Widmer-Schlumpf emphasized that she did not want to jettison the entire agreement with Italy on frontaliers, as Ticino politicians have demanded, but to modify it by addressing the taxation issue.

At the end of 2013, a total of 278,500 frontaliers were working in Switzerland, a 3.8 percent increase from the previous year, the federal statistics office said.

More than half of them live in France, with around a quarter living in Italy and a fifth in Germany.

This story first appeared on The Local Switzerland

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Switzerland and Italy hope to deliver cross-border worker tax deal ‘by 2021’

Switzerland and Italy have pledged to conclude a long-awaited tax arrangement for cross-border workers by the end of the year.

Switzerland and Italy hope to deliver cross-border worker tax deal ‘by 2021’

At a meeting in Rome between Swiss President Simonetta Sommaruga and Italian Prime Minister Giuseppe Conte, the two leaders said progress was being made on a cross-border tax arrangement. 

The agreement, originally negotiated in 2015, has as yet not been signed by either state. 

READ: How Switzerland avoided a coronavirus 'catastrophe' by protecting cross-border workers 

A 1974 agreement between the two countries doesn’t define cross-border worker. 

Sommaruga praised Switzerland’s decision to reject an initiative which would have restricted migration from EU countries and perhaps had impacts on cross-border workers. 

“In last Sunday's referendum, the Swiss people once again said that they want the free movement of people. It is a good thing for our country but it is also a good thing for the whole of Europe,” she said. 

“With neighbouring countries, Switzerland has adopted a regional approach excluding border regions and also cross-border workers from the quarantine regime. 

“I hope we can continue like this.”

While Switzerland rejected the migration limitation initiative, Ticino was one of four of Switzerland’s 26 cantons to vote in favour. 

Conte told reporters he hoped a deal was concluded “as soon as possible” and hoped it would be concluded by 2021. 

Conte hailed Italian cross-border workers as essential to the health system in the southern Swiss canton of Ticino, particularly during the coronavirus pandemic. 

READ: How Switzerland's cross-border workers are growing in number 

In the canton of Ticino, one in five healthcare workers lives over the border in Italy – approximately 4,000 people. Ticino’s population swells from approximately 360,000 people to 440,000 during an average work day due to cross-border workers from Italy.

Unlike with Italy, Switzerland has struck a tax deal for cross-border workers from neighbouring France, which was amended during the coronavirus pandemic.