Law no. 83 of 13.6.2023 ratified the new bilateral agreement between Italy and Switzerland concerning the taxation of cross-border workers, which will replace from 1st January 2024 the previous version, in force since 1974.

The new agreement involves the transition from a system of exemption in the State of residence of the worker to a system of concurrent taxation in the two States. Under the new scheme, Italian cross-border workers – i.e. residents of Italian municipalities within 20 km of the border who daily travel to Switzerland for work – will be subject to tax in Switzerland up to a limit of 80% of the tax that would ordinarily be levied there. The income produced in Switzerland must also be declared in Italy, with recognition of a credit for taxes already paid in Switzerland.

However, the provisions of the 1974 agreement (exclusive taxation in the source State) continue to apply to workers who will qualify as cross-border workers on 1st January 2024 or have been cross-border workers in the previous five years.

The second change concerns the removal of Switzerland from the list of tax heaven Countries (so-called “black list” of individuals), with the Decree of the Ministry of Economy and Finance of 20th July 2023 and effective from 1st January 2024. In this way the burdensome presumption of residence in Italy pursuant to Art. 2, para. 2-bis of Italian Income Tax Code for Italian citizens who decide to move to Switzerland and the presumption of evasion pursuant to Art. 12, para. 2 of Law Decree 78/2009 will no longer apply.

With regard to the foreign activities disclosure obligations, the provisions concerning the doubling of penalties and the assessment time limits will no longer apply to Italian residents with assets and activities in Switzerland. For the recent past, doubts remain as to whether Switzerland’s presence on this list, drawn up in the absence of directive criteria and rendered obsolete by changes in local legislation and administrative cooperation between the two Countries, remains valid.