A practitioner's checklist for distribution structures in Ticino

Before the structure is set up

The experience of the Fashion Valley yields a set of questions that advisers should ask before a group places trading, distribution or logistics functions in Ticino. The first question is functional. Which decisions will the Ticino company take, who will take them and where will those persons work? A principal company needs managers with authority over purchasing, pricing, inventory and customer relations who live and work in Switzerland or at least perform those functions there. If the group's design and brand teams remain in Italy, the residual profit that the Ticino company can defend will be correspondingly smaller. The second question concerns the Italian side of the value chain. Italian group companies should be remunerated at arm's length under Article 110(7) TUIR, with documentation that meets the Italian standard and protects against penalties. A transfer of functions from Italy to Switzerland is a business restructuring that may itself require compensation to the Italian company, an exit tax analysis and, where hallmarks are met, a DAC6 report in Italy.¹

The third question is about residence and presence. The board of the Ticino company should meet in Switzerland, and its members should be able to show that they actually direct the company. Its day-to-day management should be carried on in Switzerland for the greater part of the year. These conditions are needed to resist the new Italian residence test of principal day-to-day management under Article 73(3) TUIR.² Sales staff and managers who work in Italy should do so on terms that do not create a dependent agent or a fixed place of business, and home working by frontalieri should be monitored. The fourth question concerns customs. If the goods are to be stored in Switzerland pending re-export, the company should choose between an open customs warehouse of its own and the services of a licensed warehouse keeper or free zone operator. An own warehouse requires an authorization and reliable stock records. It should also assess the origin consequences for goods that return to the European Union.³

While the structure is operating

Once the structure operates, the decisive evidence is produced every day. Board minutes, approval workflows, e-mails and travel records show where decisions were actually taken. In an Italian tax audit they will be examined in detail, as the Kering investigation showed. Transfer prices should be reviewed annually against the actual functions performed, especially when key persons change or when functions move between entities. Customs and VAT declarations should be reconciled with the transfer pricing policy, because adjustments after import may affect the customs value. The company should also maintain a clear record of its employees' place of work and of any work done in Italy, which matters both for the permanent establishment question and for the taxation of frontalieri under the agreements of 1974 and 2020.⁴

The labour law side requires equal attention. Since the cantonal Minimum Wage Act applies to most employees in Ticino, wage structures in logistics and manufacturing must respect the sectoral minima. Employment relationships covered by a collective labour agreement that sets a binding minimum wage are excluded from the Act, which makes the wage level in such agreements a decisive factor for employers in the cluster.⁵ Restructurings and relocations should be planned with the procedures for collective redundancies under the Code of Obligations in view, including consultation of employees and notification of the cantonal employment office. The departures of Armani, Tom Ford and LGI show that social plans and transfer offers are expected by trade unions and the public.⁶

For the practitioner. Before placing trading, distribution or logistics functions in Ticino, and regularly afterwards, the following points need to be reviewed:

• Functional analysis: who decides on purchasing, pricing, inventory and customers, and where do they work?
• Italian transfer pricing documentation (Art. 110(7) TUIR) for all transactions with Italian group companies.
• Permanent establishment risk in Italy (Art. 162 TUIR, Art. 5 Swiss-Italian DTA): offices, warehouses, sales staff and home working in Italy.
• Residence risk (Art. 73(3) and (5-bis) TUIR as amended from 2024): board meetings, dayto-day management and the residence of directors.
• DAC6 (D.Lgs. 100/2020): whether an Italian intermediary or the Italian taxpayer must report the arrangement.
• Customs: open customs warehouse authorization, stock records, origin of goods returning to the EU, customs value and transfer pricing.
• Labour: cantonal minimum wage, collective agreements, collective redundancy procedures and the taxation of frontalieri.
• Reputation: whether the structure could be explained to a journalist, a trade union and an Italian prosecutor.

Notes

1. On business restructurings see OECD, Transfer Pricing Guidelines (2022, above), chapter IX; on the Italian exit tax see TUIR, Art. 166 ("Imposizione in uscita"), Brocardi.it, https://www.brocardi.it/testo-unico-imposte-redditi/titolo-iii/capo-ii/art166.html, and Chapter H.II. ↩
2. Bargagli (19 January 2024, above). ↩
3. CustA, Arts 53, 54 and 62 to 67 (above); SFAO, Follow-up (8 April 2019, above). ↩
4. Agreements of 1974 and 2020 on the taxation of cross-border workers (above). See Chapter H.I. ↩
5. LSM (above), Art. 3(1)(i). ↩
6. RSI (28 January 2017, above); RSI (12 September 2019, above); RSI (4 April 2025, above). On collective redundancies see Swiss Code of Obligations, SR 220, Art. 335d (definition), Art. 335g (notification to the cantonal employment office) and Arts 335h to 335k (social plan), https://www.droit-bilingue.ch/de-en/2/22/220-335d-469.html and https://www.droit-bilingue.ch/de-en/2/22/220-335g-472.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.