New €10,000 deductible for border workers from Casalzuigno

Context

In brief

• New Cross-Border Commuter Agreement in force from January 1, 2024
• For Article 9 of the Agreement, “old frontier workers” are people who met the tax requirements and worked in Graubünden, Ticino or Valais on 17 July 2023 or during the period from 31 December 2018 through 17 July 2023. Article 9 keeps covered employment income taxable exclusively at source in Switzerland; other workers follow the ordinary regime, with ordinary taxation in Italy, a credit for Swiss tax and Swiss withholding at 80% of the ordinary rates. The €10,000 figure in Article 4 of Italian Law No. 83/2023 is only the income limit referred to in Article 1(175) of Law No. 147/2013; it is not a general allowance for new frontier workers. Sources: ESTV factsheet (Italian) · Agreement, Art. 9 · Law No. 83/2023, Art. 4.
• Double Taxation Convention signed on March 9, 1976
• Switzerland is not a member of the EU or the EEA

Key facts

• What: Entry into force of the New Cross-Border Commuter Agreement
• When: January 1, 2024
• Where: Ticino-Italy border (Casalzuigno/Mendrisio)
• Who: Italian and Swiss governments
• The €10,000 limit is not a general allowance: Article 4 of Italian Law No. 83/2023 applies it only to the income referred to in Article 1(175) of Law No. 147/2013.

December 23, 2020, was the date on which the Italian and Swiss governments signed the new Cross-Border Commuter Agreement, a regulatory text that redefined the tax rules for those living in Italy and working in Ticino. This agreement, which required years of negotiations, has been officially in force since January 1, 2024, marking a turning point for residents of municipalities such as Casalzuigno. The Italian ratification took place with Law 83 of June 13, 2023, while the legal basis dates back to the Convention on Double Taxation signed on March 9, 1976. It is essential to clarify that Switzerland is not part of the European Union or the European Economic Area, a detail that affects bureaucratic procedures and residency rights for those seeking to settle in the canton without working.

The tax separation between the two countries

The tax mechanism for cross-border commuters is based on a clear distinction between withholding tax and direct taxes. The withholding tax on employment income is applied in Switzerland: the Swiss employer deducts the tax directly from the paycheck. Italy, for its part, avoids double taxation through the tax credit, which is entered in section CE of the tax return, the famous 730 form. This means that the tax paid in Switzerland is reassessed in Italy, preventing the same income from being taxed twice in full.

For those living in Casalzuigno, near the border with Mendrisio, the implications are direct. The geography of the Ticino border, with crossings such as Brogeda, facilitates daily commuting. However, tax rules do not account for distance in kilometers: residency and place of work are what count. Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). The €10,000 limit is not a general allowance: Article 4 of Italian Law No. 83/2023 applies it only to the income referred to in Article 1(175) of Law No. 147/2013. This temporal distinction creates two classes of taxpayers with different obligations and advantages, an aspect that those moving from Casalzuigno today must consider carefully before signing an employment contract in Ticino.

Operational details

The practical impact of the tax exemption

The €10,000 limit is not a general allowance: Article 4 of Italian Law No. 83/2023 applies it only to the income referred to in Article 1(175) of Law No. 147/2013. Represents the minimum tax base that is not taxed. For a Casalzuigno resident starting a business in Ticino from 2024, the higher deductible means that a larger part of the net income will be exempt from Italian tax. This mechanism, defined by the New Frontier Agreement, aims to make the Ticino labour market more competitive for those residing in Italy. The Convention of 9 March 1976 remains the legal basis, but the 2020 agreement updates its operational clauses.

Tax management requires precise knowledge of the entities involved. The federal and cantonal rates, as well as the tax at source, are established by specific laws and administered by the AFC/ESTV at the federal level and by the cantonal tax administrations. It is not the task of the UFAS, which deals with social security like the AVS and AI, nor of the BFS, which deals with statistics, to set these rates. Many border workers make the mistake of confusing the roles of these entities, going to ask the wrong entity for tax information. For those who live in Casalzuigno, the proximity to the border makes commuting sustainable, but the tax complexity requires relying on official channels to avoid compilation errors.

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Useful tools for your case

To verify your within/over 20 km tax scenario, use the net salary calculator and the tax return guide.

Key points

Operational procedure for the transfer

For those who decide to move to Casalzuigno and work in Ticino, the procedure starts with verifying residency. It is necessary to ensure that the purchase or lease deed complies with local regulations and that the civil‑registry residence is up‑to‑date. The next step is the request for Permit G, the document that authorizes cross‑border work. This permit is issued by the competent Swiss authority, often in coordination with the Italian authorities. It is important to submit the application early, as processing times may vary. The required documentation includes the employment contract, proof of residence in Casalzuigno and identity documents.

Once Permit G is obtained, tax management becomes automatic regarding withholding tax, but the filing of the income‑tax return in Italy remains the responsibility. The tax credit must be entered in the CE section of the 730 form. Those living in Casalzuigno must keep all Swiss pay slips to verify that the withholdings correspond to the applicable rates. In case of discrepancies, they can report them to the AFC/ESTV or to the cantonal tax services. It is not advisable to rely on approximate calculations for the return; it is better to use reliable calculation tools to estimate the net amount and the taxes due.

Tools and resources for the cross‑border worker

To evaluate the opportunity of moving, it is useful to compare the cost of living between the two countries. The cost of housing, utilities and services in Casalzuigno can be significantly lower than in Ticino. However, commuting expenses such as fuel or public‑transport tickets must be added to the budget. For those uncertain about the economic convenience, a CHF/EUR exchange‑rate comparator can help estimate real purchasing power. Moreover, for those who wish to simulate their net salary after Swiss withholdings and Italian tax, the tax calculator is the most effective tool. This tool allows entering contract parameters and obtaining a detailed estimate of the monthly net.

Choosing to live in Casalzuigno and work in Ticino is a multi‑year decision that requires analysis. Advantages include the higher salary and the quality of Swiss public services, while disadvantages may involve travel time and bureaucratic complexity. To maintain constant control over one’s fiscal and social‑security situation, it is essential to regularly update personal information. Simulate your net salary with the tax calculator (nav:calculator) to see how much will remain in your account after all withholdings and taxes foreseen by the New Cross‑Border Agreement and the 1976 Convention.