Taxation is a complicated matter for everyone, but even more so for cross-border workers. Normally, you pay Swiss taxes automatically, because your Swiss employer deducts them from your monthly salary.

However cross-border workers are usually under a different arrangement, as the tax burden needs to be shared between the worker’s country of residence and place of employment. 

While the Covid pandemic-related rules are an exception, Switzerland and neighbouring states have put into effect tax rules which often restrict the amount of days a worker can work from home, thereby encouraging workers to actually cross the border into Switzerland. 

What is the rule change for Italy-domiciled workers? 

Under the new arrangement, the Swiss government will retain 80 percent of the withholding taxes on cross-border workers. 

Italy will receive the other 20 percent. 

Under the previous agreement, Switzerland received 100 percent of the taxation, but would transfer 40 percent of it in compensation to border regions in Italy. 

EXPLAINED: What cross-border workers should know about taxation in Switzerland

A transitional deal has been struck whereby those who work in Ticino, Graubünden or Valais from the start of 2019 until the new agreement came into effect will be taxed in the same way as the previous arrangement until 2033. 

The change should not require any significant steps from cross-border workers, as the primary alterations will take place at a governmental level. 

Approximately 350,000 people cross Switzerland’s border to work, according to pre-pandemic estimates. 

An estimated 23 percent of Switzerland’s cross-border workers come from Italy. Around 55 percent live in France and 18 percent live in Germany. A handful of cross-border workers live in Austria. 

This link provides more information about taxation of cross-border commuters.