Border tax deductions Italy 2026

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024: the tax system changes
• The tax credit in 730 offsets the source tax paid in Switzerland
• Exemption €7,500 (old cross-border commuters) vs €10,000 (new) from 2024
• Refunds: the mechanism to recover taxes paid in excess

Key facts

• What: New Border Agreement redefines double taxation CH-IT
• When: Effective January 1, 2024 (signed December 23, 2020)
• Where: Frontier between Switzerland and Italy
• Who: Italian Government (Law 83/2023) and Switzerland
• Exemption amount: €7,500 (old) vs €10,000 (new)
• 2025 income declared in the 2026 return: 23% up to €28,000; 35% from €28,001 to €50,000; 43% over €50,000. For tax year 2026: 23% up to €28,000; 33% from €28,001 to €50,000; 43% above

On 1 January 2024, the New Frontier Agreement entered into force, signed between Italy and Switzerland on 23 December 2020 and ratified by Italy with Law 83 of 13 June 2023. This agreement completely redefines how taxation works for those who work in Switzerland and reside in Italy.

For frontier workers, the tax system is divided into two phases: first Switzerland withholds the tax at source directly from the paycheck (calculated on AVS/AI/IPG at 5.3% plus any cantonal contributions), then Italy allows a tax credit through the EC framework of the tax return (730). This mechanism allows Italy to avoid double taxation according to the Italian-Swiss Convention signed on 9 March 1976.

Transitional regime and

Operational details

Refunds and tax credits: the practical mechanism

Refunds are the heart of the system for the frontaliers. When a frontaliere pays the withholding tax in Switzerland, it is calculated on federal and cantonal rates that together can exceed the actual Italian tax burden. The difference between what is paid in Switzerland and what is due in Italy is refunded: these are the refunds.

The CE form 730

To apply for a refund (or to check if Switzerland still has to pay it), the procedure goes through the Italian form 730. In the model, the CE form accommodates information on income earned in Switzerland, taxes paid to the Swiss tax authority (withholding tax), and tax credits claimed. The Italian Tax Authority (and upstream the MEF for bilateral agreements) cross-references the data with the Swiss tax authority. If a balance in favor of the frontaliere emerges, a refund is generated. If, on the other hand, a debt to Italy emerges, the frontaliere will have to pay the balance.

The CE form has been designed to prevent double taxation on foreign income. The Italo-Swiss Convention of March 9, 1976, establishes that the right to tax belongs to the State in which the income is produced. In this case, Switzerland taxes the employment income (withholding tax), and Italy grants an equivalent tax credit to compensate.

Scenario: how it works in practice

Imagine a frontaliere (old category, so with an exemption of €7,500) who earns €40,000 annually gross in Switzerland. In Switzerland, he pays a withholding tax that varies depending on the canton of residence (fundamental for taxation). For simplicity, let's assume CHF 4,500 annually in withholding taxes (this is an illustrative example; the actual figure varies from canton to canton based on the combined federal and cantonal rates).

In Italy, the income of €40,000 minus the exemption of €7,500 = €32,500 taxable. For 2025 income declared in the 2026 return, the progressive calculation is €6,440 on the first €28,000 + €1,575 on the remaining €4,500 at 35%, about €8,015; for tax year 2026 it would be about €7,925 (23%/33%). However, the currency exchange rate CHF-EUR (applied at the annual average rate) and the Swiss tax credit significantly reduce the debt. Often, a refund in favor of the frontaliere emerges.

Old vs new frontaliers: the advantage accumulates over time

The difference between the exemption of €7,500 and the franchise of €10,000 is substantial. Over 33 years of transitional regime (until 2033 for old frontaliers), a new frontaliere recovers €2,500 annually in lower taxes = €82,500 in total over the period. This advantage is acquired right from the start at the time of registration in the frontaliers registry. Old frontaliers, on the other hand, will see the exemption of €7,500 expire in 2033; after that, the ordinary regime without special exemptions will apply. This expiration represents an important point of discontinuity for those who have been frontaliers for years.

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

How to Apply: Step-by-Step Procedure

Step 1: Gather the Documentation

For the 730 with the CE form, you need to collect a series of essential documents. First, the work certificate from Switzerland: it must contain the gross income earned and the total amount of taxes paid. Second, the pay stubs from February to December that document the withholding tax every month. Third, the declaration of tax residence in Italy, with the name of the municipality of residence. Finally, the Italian tax code and the number of the frontaliere permit (category G or B according to current regulations). If you have only one source of income (work in Switzerland), it is sufficient; if you also have Italian incomes (rental of a property, for example), you will need to document them separately.

Step 2: Complete the CE Form

The CE form is dedicated exclusively to foreign income taxed abroad. In this section of the 730, you will need to enter the name of the foreign state (Switzerland), the type of income (Employment), and the gross amount of foreign income converted to EUR (convert from CHF at the average annual rate). Then declare the taxes paid in Switzerland (monthly withholding tax documented by the pay stubs), and the tax credit claimed based on the double taxation agreement. If the frontaliere also has Italian incomes (e.g., rental of a property), these must be declared separately in the real estate income section (section B of the 730), not in the CE form.

It is essential to complete this form accurately, as it is the point of intersection between the Italian tax authorities and the Swiss tax authorities. The Italian tax authorities will communicate the data to SECO (Swiss State Secretariat for Economic Affairs) to verify the correct declaration of the withholding tax. Errors or omissions here could delay the refund by weeks or months.

Step 3: Deadline and Submission

The 730 must be submitted by October 31 of the year following the tax year (e.g., the 730 for 2024 by October 31, 2025). Frontaliers can choose from three submission methods: online via Agenzia delle Entrate using SPID or CIE credentials, through a certified CAF (Fiscal Assistance Center), or with the support of a licensed tax advisor. If you choose the CAF or the tax advisor, they will handle the electronic transmission. If you submit online on your own, remember to keep the transmission receipt for your records.

Use the frontaliere salary calculator on our website to estimate your net pay and the expected Italian tax burden. You can check how much tax you will pay in Switzerland and whether a refund is likely to emerge. For more information on the tax credit, consult our guide to the tax credit for frontaliers. If you are looking for specific details on when refunds arrive, read Frontaliere Refunds: When They Arrive and How to Calculate Them.

Filling out the 730 is not complicated, but it requires attention to detail: the CHF-EUR exchange rate, the correct documentation of the withholding tax, and the correct entry of data in the CE form. If you are a frontaliere for the first time, consider the support of a CAF to avoid errors that could delay the refund. Use the calculator for an initial accurate estimate of your Swiss net and discover how much tax you may recover through refunds.