Living in Brunello and working in Ticino as a cross-border commuter

Context

In brief

• The New Cross-Border Commuter Agreement is valid from 1 January 2024
• Old cross-border commuters: exemption €7,500 in the period 2024–2033
• New cross-border commuters: deductible of €10,000
• Withholding tax: withheld only in Switzerland

Key Facts

• Agreement → signed 23/12/2020; in force from 1 January 2024
• Italian ratification → Law 83 of 13/6/2023
• Old cross-border commuters → exemption €7,500; transitional regime 2024–2033
• New cross-border commuters → deductible €10,000
• Income tax → withheld only in Switzerland

On 23 December 2020, the New Cross-Border Commuters Agreement was signed. For the cross-border commuter who lives in Brunello and works in Ticino, the operational date to keep in mind is 1 January 2024. The Italian ratification is Law 83 of 13/6/2023. The wording new tax agreement 2026 does not replace this reference: the agreement has been in force since 2024.

The tax issue concerns income from employment. Withholding tax is ONLY withheld in Switzerland for cross-border commuters; Italy avoids double taxation through the tax credit in the EC framework of 730. It is therefore not a withholding tax in both countries.

The double taxation agreement between Italy and Switzerland was signed on 9 March 1976. Switzerland is not an EU/EEA member, which should be distinguished from the specific rules applied to cross-border commuters.

The distinction between old and new cross-border commuters

The regime distinguishes two categories. Old cross-border commuters, who were already cross-border commuters before 17/7/2023, are eligible for the €7,500 exemption under the 2024–2033 transitional regime. New cross-border commuters, on the other hand, have a deductible of €10,000. The classification comes before any comparison between deductions and disposable income.

The framework of cross-border work also includes the G permit and the Canton of Ticino. In addition to withholding tax, there are Swiss pension items: AHV/IV/EO at 5.3% for the employee, ALV/AC at 1.1% with a cap of CHF 148,200, UVG between 0.7 and 1.5% and BVG between 7 and 18% for age group from the age of 25. The KVG is the health insurance: G cross-border commuters have the right of option and the adult deductibles range from CHF 300 to CHF 2500. To order the initial calculation, you can use the calcolatore fiscale.

Operational details

The practical comparison for those who live in Brunello and work in Ticino does not start with the final amount alone. It is advisable to separate the tax classification, Swiss contributions and health coverage, because the source assigns different rules to each chapter.

First the tax regime

The first check is the category of cross-border commuters. The summary can be organized as follows:

The date of 17/7/2023 separates old cross-border commuters from the other cases indicated by the source. For those who have to compare disposable income, using the wrong measure alters the reading of the result. The time reference to the agreement must also be kept precise: for the New Cross-Border Commuters Agreement, 2026 is not the year of entry into force, which remains 1 January 2024.

The second level concerns Swiss social items, which are distinct from withholding tax:

Tax rates, including withholding tax and federal and cantonal rates, are determined by federal and cantonal laws. At federal level, they are administered by FTA/ESTV and, at cantonal level, by the cantonal tax administrations. FSIO relates to social security, while BFS collects statistical data and does not set rates.

KVG, rebates and separate items

The KVG is health insurance, not a health tax. Cross-border commuters with a G permit are entitled to option and the adult deductibles are between CHF 300 and CHF 2500. Pensions should also be kept in a separate line in the comparison, without automatically confusing them with the deduction from income. For this step, the confronto sui ristorni Ticino-Italia is available, while for the pension part the guida AVS e LPP can be consulted.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

The procedure for analyzing the transfer from Brunello and the work in Ticino can be built on five steps, using only the dates and entries indicated by the source.

1. Set the reference date

Start from 17/7/2023. If you were already a cross-border commuter before that date, the picture to be examined is that of old cross-border commuters, with an exemption of €7,500 and transitional regime 2024–2033. For new cross-border commuters, the reference indicated is the deductible of €10,000.

2. Apply the date of the agreement

It separately records the signature of 23/12/2020, the entry into force of 1 January 2024 and the Italian ratification with Law 83 of 13/6/2023. This avoids attributing to the so-called new tax agreement 2026 a different effective date from the one verified.

3. Separate withholding tax and tax credit

On earned income, withholding tax only takes place in Switzerland. For Italy, the step indicated to avoid double taxation is the tax credit in the EC framework of 730. The tax item should therefore not be added automatically as if the same tax were withheld in both countries.

4. Check your pension entries

When calculating your payslip, make a distinction between AHV/IV/EO, ALV/CA, UVG and BVG. The reference figures are respectively 5.3%, 1.1% with a cap of CHF 148,200, 0.7–1.5% and 7–18% per age group from the age of 25.

5. Consider KVG

If you are one of the G cross-border commuters, the KVG covers health insurance and includes the right of choice. The adult deductibles indicated by the source range from CHF 300 to CHF 2500. To translate this data into a payroll estimate, use the calcolatore stipendio.