Fewer tax and administrative obstacles between Switzerland and Italy
An individual’s physical residence in a specific territory affects the tax treatment of income
There will be a greater understanding between Rome and Bern on the tax front. Indeed, it is recent news that Italy will remove Switzerland from the blacklist.
More specifically, Swiss Federal Councillor Karin Keller-Sutter and Italian Finance Minister Giorgetti signed a political declaration concerning the regularization of some pending tax issues: in this sense, Italy will remove Switzerland from the blacklist of individuals created in 1999.
But that is not all. The two countries also agreed on a transitional solution regarding the taxation of teleworking for frontier workers. This solution will be valid until June 30, 2023.
Switzerland off the blacklist for individuals
With this solution, an issue is resolved that is particularly sensitive for political relations between the two states and which, from a tax perspective, has exposed Switzerland in the eyes of Italy, but not only Italy, as a tax haven.
Switzerland is on the list of tax-privileged states for Irpef purposes. In this sense, until proven otherwise, based on certain tax presumptions, Italy considered as tax residents in the territory of the State those persons who, even if deleted from the resident population register, have moved to states with a privileged tax regime.
Therefore, such a solution positively affects the tax position of all those individuals who have moved to Switzerland.
Presumption of residence
Generally, the presumption of residence operates to prevent that by merely transferring residence to jurisdictions considered “tax havens,” individuals evade taxation on income produced.
Under Article 2 Tuir, in fact:
for income tax, persons who, for the more significant part of the taxable period, are registered in the registers of the resident population or have in the territory of the State their domicile or residence following the Civil
It follows, therefore, that the physical permanence of an individual in a particular territory affects the tax treatment of the income received by that individual; income which, in some cases, may continue to be subject to taxation in the country of origin, despite the transfer abroad.
Until now, since Switzerland was included in the list of states and territories with a privileged tax regime, it was up to the taxpayer to prove, by providing proof to the contrary, that they were not resident in Italy and that, consequently, the income received by them could not be subjected to taxation there under Article 3 of the Tuir.
Things will likely change for the better in the face of this latest understanding.
