The Federal Tax Administration (FTA) has published the mutual agreement in the area of administrative cooperation for the exchange of data between the groups concerned in accordance with the cross-border commuter agreement of 23 December 2020.
In addition to many details concerning the tax authorities (e.g. the format of the exchange), it contains provisions that could indirectly interest employers.
Background for employers with a registered office or place of business in the Canton of Graubünden, Valais or Ticino:
The cross-border commuter agreement stipulates that from 2024, data for all employees resident in Italy (non-self-employed) except for the old genuine cross-border commuters (tax status) must be exchanged with Italy. This data, in turn, will be transmitted for all those concerned, regardless of whether they are part-time or short-term employees.
As explained in earlier blogs, the data in question is the following, in accordance with Article 7 of the cross-border commuters’ agreement: (free translation)
This information includes the following:
- a) Surname, first name, date of birth and residential address of the cross-border commuter;
- b) for cross-border commuters resident in Switzerland, their place of origin; for cross-border commuters resident in Italy, their place of birth; and
- c) the tax number allocated to the cross-border commuter by the country of residence;
- d) the gross amount of the salary, wages and similar remuneration received by the cross-border commuter;
- e) the amount of the compulsory social security contributions paid by the cross-border commuter;
- f) the total amount of tax deducted at source from the salaries, wages and similar remuneration of the cross-border commuter;
- g) Name, address and tax number of the employer.
Employers had to provide the data to their canton by the end of January. The cantons provide the data to Italy by 20 March 2025. This date has been postponed to 30 March 2025 under the newly concluded agreement.
The following terms were defined in this mutual agreement:
The residential address referred to in point (a) shall be limited to the indication of the municipality of residence in Italy.
The place of birth in Italy was also specified (free translation)
- the municipality of birth for persons with Italian citizenship born in Italy;
- the country of birth for persons with Italian nationality born abroad;
- the country of birth for persons with foreign citizenship.
The correct place of birth according to the above definition should be entered on the Italian health card.
With regard to letter d, the Swissdec ELM standard 5.0 was defined as the gross amount of the wages subject to withholding tax. The mutual agreement clarifies that the employee’s compulsory social security contributions must be included. If the employer has run the payroll correctly – e.g. when granting gross for net wage elements, the wage subject to withholding tax includes these calculations.
The compulsory social security contributions for employees are explained in the ELM specification. These are:
- AHV/IV/EO (OASI, Disability, income compensation)- contributions
- ALV (unemployment)-contributions
- NBU (non-occupational accident insurance)-contributions
- Pension fund contributions
In addition, it should be noted that the term ‘wages subject to withholding tax’ refers to all income from employment in accordance with Art. 17, Art. 17a, Art. 17b, Art. 17c, Art. 17d DBG (direct federal tax act), such as substitute income and the area of employee profit sharing.
According to the information sheet on the taxation of substitute income, these are (see Art. 84 para. 2 let. b DBG and Art. 3 QStV (withholding tax ordinance):
- Daily allowances (ALV (unemployment insurance), IV (disability insurance), KVG (health insurance), UVG (accident insurance), UVG supplement, VVG (e.g. long-term-illness insurance), etc.),
- compensation by liable third parties,
- partial pensions due to invalidity (occupational pension plan, IV, UVG, UVG supplement, etc.) and capital benefits paid in their place
There are only a few differences regarding taxable income from employment and the salary subject to withholding tax (withholding tax base). These are mainly cases in which, according to the double taxation agreement, foreign working days have to be excluded for residents abroad.
In addition, the other comparable remuneration was described: (free translation) The wording ‘and other comparable remuneration’ in Article 7, paragraph 1, letter d) refers to income equivalent to employment for employees domiciled in Switzerland. → this clarification applies to employers in Italy.
