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Swiss-Italian travel agreement settles cross-border tax questions

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David Wigersma and Giuseppe Sarno of Deloitte Switzerland explore how the governments of Switzerland and Italy have clarified the tax rules for cross-border workers affected by the coronavirus pandemic.

In July, Switzerland and Italy concluded a provisional mutual agreement, which settles the question of taxation of their respective cross-border workers* who are working from home. For the period from February until the end of June, and then to be renewable at the end of each month, cross-border commuters working from home will be deemed for tax purposes to have travelled physically to their usual place of work.



Due to travel restrictions by the Swiss and Italian governments, many cross-border workers who reside in Italy and work in Switzerland, or vice versa, have been unable to get to their ordinary place of work. This has raised the question whether this will result in a change in the tax regime applicable to them.



The agreement between Switzerland and Italy about cross-border workers who are forced to work from home due to the travel measures taken by the two governments, which applies on an exceptional and provisional basis, clarifies the tax situation. In substance, cross-border commuters working from home continue to benefit from the same tax treatment as if they had physically gone to their usual place of work. The same treatment also applies to the cross-border workers who have spent several consecutive days in their place of work without returning each day to their place of residence.



The provisions of this agreement have effect from February 24 2020 and up to and including June 30 2020. It is then renewable at the end of each month, and will eventually cease to have effect when the two states have ended their travel warnings and restrictions.  



This agreement reflects the recommendations made by the OECD and is a pragmatic approach,  which should reassure cross-border commuters and contribute to legal clarity.



*Cross-border workers are those who are resident in a municipality within 20 kilometres from the borders of Canton Ticino, Grisons and Valais, where the individuals commute to render their services.



David Wigersma

E: dwigersma@deloitte.ch



Giuseppe Sarno

E: gsarno@deloitte.ch



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