Changing working canton: tax guide (cross-border guide)

Context

In brief

• Permit G remains valid: no renewal required when changing canton
• Withholding tax varies by cantonal rates; only deducted in Switzerland
• New cross-border commuters: €10,000/year exemption; old €7,500 until 2033 (2024 Agreement)
• Modified AVS/LPP contributions: check enrollment in the new canton's funds

Key facts

• What: Change of work canton between Ticino, Grisons, or other Swiss cantons
• When: Valid from January 1, 2024 (New Cross-Border Agreement)
• Where: Swiss territory; identical rules for all cantons bordering Italy
• Who: Italy-Switzerland cross-border commuters holding Permit G
• Taxation: Withholding tax administered by AFC (Federal Tax Administration)
• Contributions: AVS/AI/IPG 5.3% employee; LPP 7–18% by age group; LAINF 0.7–1.5%
• Reference agreement: Double taxation convention Italy-Switzerland (December 9, 1976); New Agreement signed December 23, 2020
• Refunds: Old cross-border commuters (before July 17, 2023) €7,500 exemption; new €10,000 exemption

A cross-border commuter changing work canton in Switzerland faces issues beyond simply signing a new contract. Work permit, taxation, pension contributions, and health coverage require special attention, especially after the New Cross-Border Agreement came into effect on January 1, 2024. This agreement significantly modified the tax regime and refunds for those crossing the Italy-Switzerland border daily, creating new opportunities but also new administrative deadlines.

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Operational details

Impact on Payroll, AVS, and LPP

The transition between cantons modifies the contributions paid for retirement. The AVS/AI/IPG (Old Age-Invalidity-Lost Earnings Insurance) remains at 5.3% for the employee, regardless of the canton, but the employer pays their equal share to the canton of work. The LPP (Supplementary Old Age Insurance), however, is managed by the employer through a pension fund registered in that canton: the percentage contributions vary from 7% to 18% depending on age and the chosen fund. A cross-border worker who moves from an employer in Ticino to one in Graubünden may find themselves enrolled in a different LPP fund, with slightly different rates and, possibly, partially portable acquired rights (depending on the fund's regulations). Consult our guide on retirement for details on portable LPP rights.

Contributions for accident insurance (LAINF) and family allowances may also see minimal variations based on the cantons, although they remain around 0.7–1.5% for LAINF. Check the overall payroll cost in the new canton. It is important to ask the new employer for a copy of the enrollment documentation to the funds, verify that previous contributions are correctly credited, and check the first month's payroll for any anomalies. Keep all correspondence between the old and new employer regarding the transfer of LPP rights.

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Key points

Operational procedure: checklist for changing canton

Before submitting your resignation, or immediately after signing the new contract, the cross-border worker must verify some fundamental points. First, communicate in writing to the previous employer the transition to a new employer: the end-of-relationship documentation must specify the end date and the amount of TFR (End-of-Employment Compensation), or the Swiss equivalent if already paid. Request a copy of the communication that the new employer will make to the AFC and SEM (within 8 days from the first day of work) and verify that the G Permit is correctly registered with the new canton of employment.

Subsequently, check that the new employer has enrolled the cross-border worker in the AVS, LPP, and accident insurance funds of the new canton. Request a copy of the enrollment notification to the funds. If coming from a previous Swiss enrollment, verify the transfer of acquired LPP rights (if portable according to the fund's regulations). Notify the change of canton to the LAMal insurer within two weeks of the change of work address. If you intend to change insurer, cancel at least 3 months before the annual policy expiration.

Check the amounts withheld in the first pay slip of the new canton: withholding tax, AVS, LPP, and health insurance. Compare them with the previous pay slip to ensure they align with the tax tables of the new canton. If you notice any anomalies, report them immediately to the new employer.

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