Resignation from cross-border commuters: terms and steps in Ticino

Context

TL;DR

• Frontier Agreement in force from 1 January 2024
• Old frontier workers: exemption of €7,500 in the transition 2024–2033
• New frontier workers: deductible of €10,000
• Withholding tax withheld only in Switzerland

Key facts

• Agreement: signed on December 23, 2020
• Italian ratification: Law 83 of 13 June 2023
• Double taxation agreement: 9 March 1976
• Old cross-border commuters: already such before 17 July 2023
• KVG: right of option for cross-border commuters with G permit

From 1 January 2024 the New Cross-border Workers Agreement is in force. For a cross-border worker who works in the Canton of Ticino and resides in Italy, this date must be kept separate from the notice period: the first defines the framework of the agreement, the second governs the closure of the relationship according to the contract and the applicable rules.

The text was signed on 23 December 2020 and ratified in Italy with Law 83 of 13 June 2023. The correct reference, therefore, is not a new 2026 tax agreement: the indicated entry into force is 1 January 2024. The Italy-Switzerland Convention against double taxation was signed on 9 March 1976, while Switzerland is not a member of the EU or EEA.

When the relationship ends, the basic tax rule remains precise: on the cross-border worker's income, withholding tax is withheld only in Switzerland. Italy avoids double taxation through the tax credit indicated in the EC framework of 730; it is therefore not an ordinary withholding tax in both countries.

The term must be separated from the rest

Resignation, termination of the employment contract and the notice period are the first file to be closed. The date of communication and the date of termination should not be confused: before sending the communication, the cross-border worker must find the deadline from the contract and the applicable provisions. A date chosen without this verification may leave open the question of whether the relationship will actually end.

Then there are separate checks on the G permit, possible unemployment and the final pay slip. Added to these are AVS, LPP and KVG. The termination of the relationship must therefore be recorded separately for taxation, social security and health insurance, without automatically transforming one plan into the other.

Tax rates, including withholding tax and federal/cantonal rates, are established by federal and cantonal laws. At federal level they are administered by the AFC/ESTV and the cantonal tax administrations. UFAS, which concerns social security, and BFS, which collects statistical data, are not the bodies that set the rates. It is a useful step to avoid asking the wrong structure for a payroll check.

Operational details

How to read your pay slip and taxes after you resign

The most delicate part for a cross-border worker is not stopping at the last net salary. When checking documents, at least three levels must be separated: tax classification, Swiss contributions and health insurance. The reason for termination does not replace the dates that define the worker's category.

The comparison between old and new cross-border workers

The comparison serves to avoid applying the exemption of one category to another. A cross-border worker who was already a cross-border worker before 17 July 2023 must be read in the context of the old cross-border workers and the transitional period; for a new cross-border worker the figure to consider is the €10,000 deductible. The withholding tax on earned income remains on the Swiss side, while the credit in the EC framework of 730 is the Italian reference for avoiding double taxation.

Social security items have their own weight on a Swiss pay slip. The AVS/AI/IPG contributions payable by the employee are 5.3%; AD/AC is 1.1% up to a cap of CHF 148'200; LAINF is between 0.7% and 1.5%; LPP ranges from 7% to 18% by age group, from the 25th year. They are different percentages and should not be exchanged with withholding tax. Reading them separately helps not to confuse the final net with a single rate.

KVG is not a tax item

KVG is health insurance, not the so-called 'health tax'. Cross-border workers with a G permit have the right of option; for adults the indicated deductibles range from CHF 300 to CHF 2,500. Even after notification of resignation, this item must be filed as insurance and not added to tax or social security rates.

The distinction avoids two practical errors: using the last payslip as a measure of the entire picture and confusing taxation with social security. For those who leave a job in the Canton of Ticino, the useful verification is therefore a statement with tax regime, AVS/LPP withholdings and KVG position, not a single statement of net income.

Key points

Practice procedure before the last day

To make the termination of the employment contract orderly, the cross-border worker can work on a short sequence. The goal is to set the correct date and then deliver all information to the right chapter, without mixing contract, taxes, social security and insurance.

Five checks before closing the relationship

1. Obtain the notice period. Read the contract and identify the applicable deadline. Put in writing, for personal use, the date of communication and the termination date calculated on the verified term. Do not replace this step with a generic figure found online.

2. Classify the tax position. Check if you were already a cross-border worker before 17 July 2023. This check separates the regime for old cross-border workers, with exemption of €7,500 and transitional period 2024–2033, from the €10,000 exemption provided for new cross-border workers.

3. Rebuild the tax part. Collect the information on the withholding tax withheld in Switzerland and prepare the reference to the tax credit of the EC framework of 730. For doubts about the rates, the correct perimeter is that of the federal and cantonal laws, the AFC/ESTV and the cantonal tax administrations.

4. Separate your pension from your paycheck. Read the AVS/AI/IPG, AD/AC, LAINF and LPP entries as different chapters. The employee must recognize the percentages and cap indicated for AD/AC, without adding them to the withholding tax or using them to estimate the net on their own.

5. Close administrative controls. The end of the relationship must be verified separately for the G permit and for any unemployment: you can consult the guide at Permesso G/B and that at disoccupazione frontalieri. On the healthcare level, it also retains the reference to the KVG option right and the applicable deductible.

Once these steps have been completed, the cross-border worker has a separate track for contract, taxation, social security, permit and health coverage. It's the most straightforward way to deal with a resignation without turning the end date into an automatic response about taxes or unemployment.

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