How is the Swiss border payroll tax calculated at source?

Tax at source in Switzerland applies only on income that exceeds the exemption. From 2024, the old frontier workers are entitled to €7,500 gross tax-free (with variations in the transitional regime until 2033), the new ones to €10,000. On higher income, the cantonal state applies the tax at source according to its own rates. The Italy-Switzerland Convention of 1976 guarantees that Italy does not apply additional tax: the border worker reports the Swiss withholding tax in the EC framework of 730 and receives a tax credit.

What is the difference between the AVS/AI/IPG contributions and the LPP fund in the paycheck?

AVS/AI/IPG (5.3%) are mandatory contributions to Swiss social security (old age, disability, loss of earnings allowance) paid by both the employee and the employer. The PPI (7-18% depending on age) is the pension fund of the second pillar, also mandatory from the age of 25 onwards, with rates differentiated by age group. Both are deducted from the monthly gross and represent fundamental social protections for the border worker.

As a border worker, how can I verify that I am not paying taxes twice?

Double taxation is avoided by the system itself: Switzerland and Italy, according to the 1976 Convention, agree that the tax is paid only in Switzerland (where you work). In the Italian 730, CE framework section, report the amount of tax paid to the Swiss source. If the CAF completes correctly, you will receive tax credit in Italy and no further payment due. Keep all paychecks and the Swiss tax certificate for verification.

Why is LAMal optional for G Permit border crossers while other contributions are mandatory?

LAMal (health insurance) is optional for border workers with G Permit because it is assumed that they maintain Italian health coverage (SSN) and do not need double coverage. However, many border crossers choose to join LAMal to also have protection for medical expenses in Switzerland. Franchises vary (CHF 300-2,500 per adult) and the premium depends on age and canton. Before giving up, check if your Italian coverage is sufficient for the services received in Swiss territory.

Swiss border payroll: AVS, LPP and real net (cross-border guide)

Di Laura Bianchi · Published on 5 September 2026

Financial advisor reviewing Swiss payroll and tax withholding documentation

From the New Frontier Agreement in force since 2024: how to calculate the AVS, LPP, LAMal withholdings and the tax at source in the Swiss paycheck.

Context

In brief

Withholding tax only in Switzerland from 1 January 2024
Exemption €7,500 (old cross-border workers) or €10,000 (new cross-border workers)
AVS/AI/IPG 5.3%, LPP 7-18%, LAMal optional for Permit G

Key facts

What: New payroll rules for Italian cross-border workers
When: 1 January 2024 (New Cross-Border Agreement in force)
Where: Switzerland (all cantons)
Who: Italian cross-border workers with Permit G/B
Old exemption: €7,500 annually (transitional regime 2024–2033)
New exemption: €10,000 annually
AVS/AI/IPG: 5.3% of gross salary (employee)

The New Cross-Border Agreement, signed on 23 December 2020 and effective from 1 January 2024, has redesigned the payroll rules for Italian cross-border workers in Switzerland. One of the most relevant novelties concerns the withholding tax regime, now exclusively withheld in Switzerland and never in Italy. The paradigm shift to avoid double taxation passes through the new exemption, which varies depending on whether you are an 'old cross-border worker' (already such before 17 July 2023) or a 'new cross-border worker' who entered after that date.

The Italian ratification of the agreement took place through Law No. 83 of 13 June 2023. For old cross-border workers, the transitional regime provides an exemption of €7,500 gross per year, with the right to tax credit in the Italian 730 model. New cross-border workers, on the other hand, benefit from a franchise of €10,000. In the transitional regime from 2024 to 2033, the amount subject to withholding tax varies depending on the year, until the distinction between the two categories ceases.

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Operational details

How the net salary is composed

The net salary that a cross-border worker receives each month is the result of a methodical subtraction between the agreed gross salary and a series of mandatory deductions. In the case of Italian cross-border workers, the calculation is complicated by the two different withholding tax rates applied depending on whether the worker is a "old" or "new" cross-border worker.

Let's take a generic scenario: a cross-border worker receives an agreed gross salary (Bruttolohn in Swiss German). From this amount, the following deductions are made, in order:

1. AVS/AI/IPG: 5.3% of the gross, withheld as a mandatory contribution for social benefits. 2. AD/AC: 1.1% up to a maximum of CHF 148,200 of insured income per year. 3. LAINF: 0.7-1.5% depending on the sector of activity. 4. LPP: 7-18% depending on age (from 25 years onwards). 5. LAMal: Optional for Permit G. If joined, approximately 5-8% of the gross is withheld (but varies based on the premium and deductible, generally CHF 300–2,500 for adults). 6. Withholding tax: Now withheld only in Switzerland. The first amount (€7,500 for old, €10,000 for new) remains tax-free.

Old vs new cross-border workers: the impact on the paycheck

The distinction between those who were already cross-border workers before July 17, 2023, and those who entered afterward is not merely academic—it has direct implications for the monthly paycheck and the annual tax return.

Old cross-border workers: Benefit from an exemption of €7,500 per year in the transitional regime that develops from 2024 to 2033. During the transitional regime, the amount subject to withholding tax varies year by year, allowing a gradual adjustment to the new system.

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Key points

Checklist: how to verify your payslip every month

Once you receive your payslip from your Swiss employer, the cross-border worker should follow a simple procedure to check that the calculations are correct:

1. Check the gross amount: Verify that the gross salary corresponds to the amount agreed in the contract. Any difference (increments, agreed increases, bonuses) must be documented.

2. Verify AVS/AI/IPG deductions: These should be 5.3% of the gross amount. If the gross amount is, for example, CHF 4,000, the AVS/AI/IPG deductions should be approximately CHF 212.

3. Check AD/AC: Approximately 1.1% up to the annual maximum of CHF 148,200. If the cross-border worker has not yet reached the annual maximum, the deduction appears; once exceeded, it disappears from subsequent payslips.

4. Verify LAINF: Depends on the sector (between 0.7% and 1.5%). Compare with previous payslips to ensure consistency.

5. Check LPP: Should vary between 7% and 18% depending on your age bracket (from 25 years old). If you are under 25, it should not be deducted.

6. Check withholding tax: If the annual gross income exceeds the exemption (€7,500 for old, €10,000 for new), the deduction starts on the income above.

7. Keep the payslip: Digitally archive (scan) all Swiss payslips and tax documents.

Annual deadlines and available tools

By December 31 of each year, the Swiss employer issues the tax certificate (Lohnausweiskopie) which reports:

Annual gross salary
All social deductions
Withholding tax paid

In March-May of the following year, the cross-border worker completes the 730 form at a CAF or accountant, entering:

In section RA the employment income
In section CE the taxes paid at source in Switzerland for the tax credit

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Frequently Asked Questions

How is the Swiss border payroll tax calculated at source?: Tax at source in Switzerland applies only on income that exceeds the exemption. From 2024, the old frontier workers are entitled to €7,500 gross tax-free (with variations in the transitional regime until 2033), the new ones to €10,000. On higher income, the cantonal state applies the tax at source according to its own rates. The Italy-Switzerland Convention of 1976 guarantees that Italy does not apply additional tax: the border worker reports the Swiss withholding tax in the EC framework of 730
What is the difference between the AVS/AI/IPG contributions and the LPP fund in the paycheck?: AVS/AI/IPG (5.3%) are mandatory contributions to Swiss social security (old age, disability, loss of earnings allowance) paid by both the employee and the employer. The PPI (7-18% depending on age) is the pension fund of the second pillar, also mandatory from the age of 25 onwards, with rates differentiated by age group. Both are deducted from the monthly gross and represent fundamental social protections for the border worker.
As a border worker, how can I verify that I am not paying taxes twice?: Double taxation is avoided by the system itself: Switzerland and Italy, according to the 1976 Convention, agree that the tax is paid only in Switzerland (where you work). In the Italian 730, CE framework section, report the amount of tax paid to the Swiss source. If the CAF completes correctly, you will receive tax credit in Italy and no further payment due. Keep all paychecks and the Swiss tax certificate for verification.
Why is LAMal optional for G Permit border crossers while other contributions are mandatory?: LAMal (health insurance) is optional for border workers with G Permit because it is assumed that they maintain Italian health coverage (SSN) and do not need double coverage. However, many border crossers choose to join LAMal to also have protection for medical expenses in Switzerland. Franchises vary (CHF 300-2,500 per adult) and the premium depends on age and canton. Before giving up, check if your Italian coverage is sufficient for the services received in Swiss territory.