Frontier workers: what changes with the new substitute tax from 2024 (cross-border guide)

Context

In a nutshell

• New tax regime in force from 1 January 2024 for Italy-Switzerland border workers
• Deductible doubled to €10,000 for new frontier workers (post 17/7/2023)
• Transitional regime until 2033 for those who already worked before 2023
• Compulsory Swiss social contributions (AVS/AI/IPG, AD/AC, LAINF, LPP)

Key facts

• What: Application of the New Frontier Agreement (signed on 23/12/2020)
• When: Entered into force 1 January 2024
• Where: Canton Ticino and other neighbouring cantons
• Who: Frontier workers with G permit (salaried workers)
• Amount: Deductible €10,000 for new frontier workers; exemption €7,500 for old frontier workers (2024-2033)

On 1 January 2024, the New Frontier Agreement signed on 23 December 2020 between Italy and Switzerland, ratified by Italy with Law 83 of 13 June 2023, entered into force. This agreement radically changes the tax regime for the approximately 70,000 Italian border workers working in Ticino. The main change concerns the income tax at source on employee income, withheld directly in Switzerland. Italy continues to guarantee the tax credit through the CE framework of the model 730, avoiding double taxation.

Who's interested

The new regime applies to all G permit holders (salaried workers) resident in Italy and employed in Switzerland. Border workers already active before 17 July 2023 fall under a transitional regime until 2033, with different rules for

Operational details

What concretely changes for border workers?

Fiscal impact: before vs after 2024

Before 2024: Border workers were subject to a Swiss source tax with progressive rates, with no specific deductible. Italy applied the tax credit only on Swiss tax paid.

After 2024:

• New frontier workers: The deductible of €10,000 reduces the Italian taxable amount. Example: a gross Swiss income of €40,000 is taxed in Italy only on (€40,000 - €10,000) = €30,000. The personal income tax rate starts from 23% up to €28,000.
• Old frontier workers: The exemption of €7,500 remains more advantageous only if the Swiss income is less than €7,500. For higher incomes, the new deductible of €10,000 would have been more favourable, but it does not apply to them.

Practical scenario: comparative calculation

Consider a frontier worker with an annual Swiss income of €35,000:

• If new border crossing (post 17/7/2023):
• Italian taxable amount: €35,000 - €10,000 = €25,000
• Income tax: €25,000 taxed at 23% = €5,750
• If old border crossing (pre 17/7/2023):
• Italian taxable amount: €35,000 - €7,500 = €27,500
• Income tax: €27,500 taxed at 23% (first bracket) + 35% on €500 (surplus over €28,000) = €6,400 + €175 = €6,575

Result: The new frontier worker pays €825 less in personal income tax thanks to the higher deductible.

Beware of social contributions

Swiss contributions (AVS/AI, AD/AC, LAINF, LPP) represent about 12-25% of salary

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

What should border guards do now?

Immediate operational steps

1. Check status: Check if you are classified as' old '(pre 17/7/2023) or' new 'border crossing. The date of employment is indicated in the Swiss contract. 2. Update the declaration: From 2024, new frontier workers must indicate the deductible of €10,000 in the EC framework of 730. Old frontier workers continue to use the €7,500 exemption. 3. Check the payroll: Verify that Swiss contributions (AVS, AD, LAINF, LPP) are withheld correctly. The 2024 rates are set by the Swiss authorities. 4. Choose health insurance: Border workers are entitled to the Swiss LAMal option. Compare costs (CHF 300-2,500 deductible) and coverage with Italian insurance.

Critical deadlines

• Income tax return 2024: By 30 September 2025 (PF Income form) or April 2025 (730 pre-filled).
• Tax credit request: Automatic with the CE framework, but checks the pre-filled data of the Revenue Agency.

Essential Tools

Use Frontaliere Ticino's calcolatore fiscale per frontalieri to simulate the monthly net with the new rules. It also compares pension options (AVS/LPP vs INPS) with the pension comparator.

⚠️ Attention: Swiss banks charge CHF/EUR exchange fees. Evaluate a multicurrency account to reduce conversion costs.

💡 Tip: Keep all Swiss payrolls and tax certificates