Switzerland fears it will become less attractive to cross-border workers due to the impact of a new deal with Italy

The new tax agreement makes the Swiss labor market less attractive for cross-border Italian workers. The southern canton of Ticino is now worried about the impact this will have on the economy and the urgent need for Italian workers.

Around 80,000 employees cross the border from Italy to Switzerland to work every day. (Source: Swissinfor.ch)

Over the past six months, cross-border workers from Italy to Switzerland have faced significant tax increases. This has left cross-border workers from Italy to Switzerland with no income to match. Reports from the industry and catering sector show a drop in job applications.

“We have seen a decrease in the number of applications,” said Massimo Suter, president of the Gastro Ticino workers' union.

Meanwhile, the economy in the canton of Ticino is heavily dependent on cross-border commuters from the Lombardy region of Italy. About 80,000 workers cross the border to work every day.

Nearly a third of those working in Ticino come from Italy. High wages used to be the reason they were willing to cross the border to work.

Meanwhile, Piero Poli, owner of a pharmaceutical company in the city of Manno in the state of Ticino, is concerned that the new tax deal will have a strong impact on the labor market.

“It is very possible that people will now reconsider working in Switzerland,” he said. “They pay higher taxes, which means lower wages, but they still have to endure a two-and-a-half-hour drive every day. Not to mention the frequent traffic jams on the routes from Italy to Ticino, which are annoying for the locals.”

Under the new agreement, Switzerland will retain 80% of the withholding tax on income of cross-border travelers. Cross-border travelers will also be taxed in their country of residence.

The new tax agreement is not in the interests of employers, said Luca Albertoni, director of the Ticino Chamber of Commerce.

“ Politicians want to control the wages of cross-border commuters, making their income less attractive and Switzerland less attractive,” he explains. “The goal is to close the wage gap between locals and cross-border commuters. So there is a conflict.”

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