Living in Italy and Working in Switzerland

Switzerland is one of the wealthiest countries on the planet. But why should you consider living in Italy while working in Switzerland? There are several benefits to doing so, but this opportunity remains open only to those legally resident within the boundaries of the European Union. Switzerland is easily reachable by train and many Italians do make the daily commute. Let’s have a look at what it’s like.

The Taxation Agreement between Italy and Switzerland

In December of 2020, Italy and Switzerland signed a new agreement which considered income taxation on cross-border commuters along with a protocol that amended the double taxation treaty that had been in force between the two countries since the 1970s. This prior agreement between Italy and Switzerland had become long outdated and several areas, such as the definition of “cross-border worker” remained unclear. This new agreement clarifies such matters and also updates the laws regarding jurisdiction of taxation authorities and tax liability for those affected cross-border commuters. Additionally, it takes into account developments since the last agreement was signed, allowing employers and their employees to comply more easily.

Cross-Border Workers in the EU and Switzerland

A “cross-border worker” is a person who resides in another EU country or European Free Trade Association (EFTA) and works in Switzerland. These workers, sometimes also referred to as “cross-border commuters” or “frontier workers,” can be employed by a company in Switzerland or self-employed but with company headquarters in Switzerland. The general rule, however, is that the person must return to their main place of residence at least once a week, in this case that means Italy.

At the moment, about 20% of Switzerland’s foreign workers are cross-border commuters. They make up approximately 7% of the total Swiss workforce but this trend is continuing to rise. Many of them come from France, but Germany and Italy also have a significant amount of people domiciled there yet working in Switzerland.

In order to become a cross-border worker in Switzerland, you will need to acquire a G-Permit from the cantonal authorities where you are working. G-permits are usually valid for one year – similar to the Italian permesso di soggiorno per lavoro – and are limited to the border zone of the issuing canton. For those unfamiliar with Switzerland’s governmental structure, each “canton” functions as an autonomous region and the country itself has no centralized government like European Union countries do. While EU citizens can move freely between other EU countries, Switzerland is not a part of the EU, meaning that even EU/EFTA nationals require a permit to work in Switzerland. You can only obtain a G-permit if you have legally resided in one of Switzerland’s neighboring countries for at least six months.

Insurance for Cross-Border Workers

Cross-border commuters are responsible for insuring themselves against illness beginning from the first day of their employment. Residents of France, Germany, Austria, and Italy (all bordering Switzerland) can choose to be insured either in their country of residence or in Switzerland. It is not necessary to be insured in both places simultaneously. 

If you prefer to be insured in your country of residence instead of Switzerland, then you have three months from the time you are issued your G-permit to submit an exemption request to your local cantonal office, i.e., the location of your workplace.

Switzerland’s Social Security System

If you work in Switzerland, even as a cross-border worker, you must participate in Switzerland’s social security system which is called “Old Age and Survivors Insurance” or OASI, an acronym that works out very well in Italian. If you are not self-employed your employer will make contributions that are deducted from your salary. Once you have contributed for a consecutive 12 months you will then be eligible for your OASI pension once you hit the legal Swiss retirement age, which is currently 65 for men and 64 for women. Like other pension schemes, Switzerland’s is based on the amount of your salary and duration of your employment in Switzerland.

Banking and Home Ownership

In order to receive your paycheck, you will need to open a bank account in Switzerland. Employers usually expect you to have a bank account there and many Swiss banks will open accounts for cross-border workers with no foreseeable problems, although in many cases will likely charge some additional “non-resident fees.”

Cross-border workers are legally able to buy a second home within their canton in Switzerland. No special permits are required for small spaces, i.e., less than 1000m². While you can buy and legally own this property, you are not legally able to rent it to anyone else. In addition to this, it is unlikely that any Swiss bank will issue a loan to anyone who is a non-resident, so if you are planning on acquiring property it will be necessary to find another means of obtaining a loan.

Unemployment Benefits in Switzerland

Only residents of Switzerland are entitled to Swiss unemployment benefits. However, since contributions for unemployment benefits are automatically deducted from your salary you may be able to still claim benefits from the unemployment office of your country of residence. Previous employment in another EU/EFTA country will also count towards the unemployment benefit’s eligibility requirement.

Family Benefits of Working in Switzerland

Cross-border workers are able and entitled to take paid maternity or paternity leave in Switzerland. As long as they have contributed to the Swiss social security system for at least nine months prior to the birth of their child and worked for at least five of those months, women can claim maternity leave. However, you will be ineligible in Switzerland if you have a job in your country of residence which accounts for more than 25% of your salary.

Men are also entitled to two weeks of paid paternity leave from their work in Switzerland after the birth of their child, but not before. This paternity leave can be spread out or taken all at once, but it must be used within six months of the child’s birth. Mothers are entitled to take up to 14 weeks of paid maternity leave.

In addition to maternity and paternity benefits in Switzerland, there are also child benefits as long as your children live in an EU/EFTA country. This benefit is issued along with your salary. That said, this is only valid if you both work in Switzerland, if one of the couple works in the family’s country of residence, you must claim child benefits there and cannot receive Swiss benefits. These benefits must be applied for through the employer.

There are many benefits to being a cross-border worker. It is not easy to do, but the ability to do it is partly what the European Union was founded upon and the fact that Switzerland, though not part of the EU, allows EU/EFTA workers to do so demonstrates a spirit of solidarity. 

Do you want to check related subjects? Take a look at our other articles such as, Renting a House in Italy, GET PAID TO MOVE TO ITALY: IS IT POSSIBLE?, COSTS OF BUYING A HOUSE IN ITALY: HOW MUCH DOES IT REALLY COST? and PROPERTY TAX IN ITALY: THE ULTIMATE GUIDE FOR 2020.