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Switzerland: Campione d’Italia now part of EU Customs Union; new consumption tax

Switzerland: Campione d’Italia part of EU Customs Union

Campione d’Italia—as from 1 January 2020—is no longer part of the Swiss customs territory and has joined the customs territory of the EU.

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Campione d’Italia borders Lake Lugano in the Lombardy region of Italy, and otherwise is surrounded by the Swiss canton of Ticino.

In 2016, Italy stated its intentions to exercise tax jurisdiction over the Italian enclave located in the region of Ticino, Switzerland. Following an official request to the EU and an agreement with Switzerland, Campione d’Italia and the Italian waters of Lake Lugano have since 1 January 2020 been officially included in the customs territory of the EU (and within scope of its excise taxes).

Although the enclave remains outside the territorial scope of the EU value added tax (VAT) regulations, it was decided to introduce a local consumption tax in Campione d’Italia, bringing its “no VAT regime” to an end. In order to avoid any potential distortions of competition with the surrounding Swiss border region however, the local VAT rate was aligned with the standard Swiss VAT rate at 7.7% (so lower than Italy’s standard VAT rate of 22%).

Changing the customs status of Campione d’Italia also means that a new customs border was created between Switzerland and Italy. In this respect, both countries will set up a joint national control office at the Bissone/Campione d’Italia border crossing.

Read a January 2020 report prepared by the KPMG member firm in Switzerland

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