During a meeting with the Ticino government on Friday, the head of the Federal Department of Finance Ueli Maurer, announced that the much-awaited agreement between the two neighbouring countries will be signed by the end of the year. 

However, it will take about two years for the new system to be enacted, because the treaty must first be ratified by the parliaments of both countries.

Until now, cross-border commuters from Italy have been taxed only in Switzerland. The cantons where they work — mostly Ticino, but also Valais and Graubünden — forwarded 38.8 percent of the collected tax revenue to workers’ home towns.

But under the new accord, these employees will pay up to 70 percent of the income tax in Switzerland.

A double-taxation agreement means they could deduct this amount from the income tax they pay in Italy.

The new treaty will apply to commuters who live within 20 kilometres of the border.

According to the head of Ticino’s government, Norman Gobbi, the agreement also seeks to prevent wage dumping, which is causing a sharp fall in wages in the canton.

“The salaries are 20 percent lower here than in the rest of Switzerland”, he said.

READ MORE: Swiss salaries: What wages can you expect when working in Switzerland? 

Over 67,000 Italians cross the border each day to work in Switzerland. In the canton of Ticino, one in five healthcare workers comes from Italy.

Switzerland already concluded tax agreements for cross-border workers from France and Germany.

In total, just over 332,000 cross-border commuters from France, Italy, Germany, and Austria are employed in Switzerland.