Why is source tax withheld only in Switzerland and not in Italy?

According to the Convention for the avoidance of double taxation between Italy and Switzerland (signed on 9 December 1976), the right of primary taxation on the income of employees is the responsibility of the State in which the work is carried out, i.e. Switzerland. Italy recognizes this principle and avoids applying an additional tax: the border worker pays taxes only in Switzerland. In the Italian declaration (Form 730, EC Framework), it communicates the amount paid in Switzerland and obtains a tax credit that reduces the Italian personal income tax.

What does transitional regime 2024–2033 mean and who benefits from it?

The New Frontier Agreement, which entered into force on 1 January 2024, distinguishes those who were already border workers before 17 July 2023 (old border workers) from those who acquired the qualification afterwards. Old frontier workers benefit from an exemption of €7,500 per year from Italian taxable income under the transitional regime until 31 December 2033. New frontier workers directly benefit from a deductible of €10,000. This means that the first €7,500 (or €10,000) of annual income is not subject to Italian taxation.

How do I recover Swiss taxes on my Italian return?

In Form 730, fill in the CE Framework (foreign income) by entering the gross income declared in Switzerland, the taxes paid at source (withheld from Switzerland) and the applicable deductible. The Revenue Agency applies the Italian personal income tax to the net income (gross − deductible) and compares the result with the Swiss taxes paid. If the Swiss ones are higher, you get a refund; if lower, you pay the difference. The 730 is due by June 30 of the following year.

Is the Swiss LAMal mandatory for G Permit holders?

No. The border worker with G Permit resides permanently in Italy and has the right of option: they can maintain their registration in the Italian INPS system or join the Swiss LAMal. If you stay with INPS, you do not pay LAMal in Switzerland. If you choose the Swiss system, you will have to pay a monthly deductible premium between CHF 300 and CHF 2,500. The choice must be communicated to the employer and the competent body.

What is the difference between AVS, LPP and LAINF in the paycheck?

AVS is the federal mandatory old-age pension (first pillar): 5.3% of salary. LPP is the company pension (second pillar): 7–18% based on age, compulsory from 25 years. LAINF is insurance against occupational accidents: 0.7–1.5% of salary. All three are retained by the employer and paid to the relevant bodies (FOPH, company insurance company, SUVA). The border worker contributes throughout the duration of the employment relationship and accumulates pension rights in Switzerland.

Swiss payroll frontiers 2026 (cross-border guide)

Di Marco Ferrari · Published on 4 September 2026

Swiss payslip document with CHF amounts and deductions overlaid on Lugano's waterfront and Lake Lugano view.

Practical guide: read the deductions (source tax, AVS 5.3%, LPP 7–18%, LAMal), calculate the net, recover the taxes in 730 with the deductible €7.500/€10,000.

Context

In brief

Tax only in Switzerland: IT tax credit in the CE 730 form
New Agreement from 1 January 2024 (signed 23 December 2020)
Exemption €7'500 (pre-17/7/23) or €10'000 (new commuters)
Rates: AVS 5.3%, LPP 7–18% depending on age, LAINF 0.7–1.5%

Key facts

What: Deductions on the pay slip of commuters (withholding tax, AVS, LPP, LAMal, LAINF contributions)
When: From 1 January 2024; transitional regime 2024–2033
Where: Canton Ticino and border crossings (Brogeda, Chiasso, Gaggiolo)
Who: Italian commuters, Swiss employers, AFC/ESTV
Exemption: €7'500 (commuters pre-17/7/23) or €10'000 (new)
Withholding tax: ~8–15% on employment income (per canton)
Convention: Double taxation agreement between Italy and Switzerland of 9 December 1976

The pay slip of the Swiss commuter is determined by a complex system of deductions, regulated by the New Commuters Agreement that came into force on 1 January 2024. This agreement, signed on 23 December 2020 and ratified by Italy with Law 83 of 13 June 2023, introduces crucial provisions on the taxation of employment income for those who reside in Italy and work in Switzerland.

The most important novelty concerns the withholding tax regime. For commuters, income tax is withheld exclusively in Switzerland. Italy avoids double taxation through a tax credit, reported in the CE section of the income tax return (model 730). This mechanism, governed by the Convention to avoid double taxation between Italy and Switzerland of 9 December 1976, allows the commuter to recover Swiss taxes in their Italian declaration.

…

Operational details

Purpose: From gross to net — how to read the pay slip

The pay slip of a cross-border worker is the first document where the tax regime is concretely manifested. When the Swiss employer issues the salary, a sequence of deductions is applied: first the withholding tax (based on cantonal tariffs), then the mandatory federal contributions (AHV/AI/IPG, unemployment, accidents), and finally the contributions to the company pension scheme (LPP). The result is that the net amount received can be significantly lower than the gross amount. For a cross-border worker with a monthly gross income of CHF 5,000, the total deductions (tax plus contributions) can vary between CHF 900 and CHF 1,400, depending on the canton of work, age (relevant for LPP), and the structure of the company.

Impact of the €7,500 or €10,000 allowance

For cross-border workers who benefit from the allowance, the advantage emerges in the Italian tax return (730), not directly on the pay slip. Switzerland still applies deductions on the gross amount; the cross-border worker recovers the advantage when declaring the €7,500 or €10,000 exempted in Italy. This entails two practical consequences: the Swiss pay slip does not show this exemption, and the recovery is deferred to the annual declaration (by June of the following year).

…

Key points

Payroll checklist: managing the cross-border pay slip

Once you receive the Swiss pay slip, the cross-border worker must follow this operational procedure:

1. Verify the gross amount and check that it corresponds to the employment contract. If the contract provides for supplements (overtime, allowances, bonuses), they must appear here.

2. Read the basic deductions: withholding tax, AVS 5.3%, unemployment (AC 1.1%), accidents (LAINF 0.7–1.5%), LPP (7–18% depending on age). If an item is missing, contact the company's payroll office.

3. Calculate the net amount: gross − tax − federal contributions − LPP − any other deductions. This is the amount that ends up in the bank account.

4. Keep the documentation: each pay slip must be archived. It will be needed for the Italian tax return to demonstrate the declared income, taxes paid, and the application of the exemption.

Deadlines and tax return

The tax credit (recovery of withheld Swiss taxes) is requested in Italy in the 730 model, section Quadro CE. The deadline for submission is by June 30 of the year following the year of work. For the 2024 income, the 730 must be submitted by June 30, 2025. In the Quadro CE, the cross-border worker declares the total amount of gross Swiss income, the taxes paid at source (Swiss withholdings), and the applicable exemption (€7,500 or €10,000).

The Italian Revenue Agency recognizes the tax credit by comparing the Italian IRPEF on the declared income with the Swiss taxes actually paid. If the Swiss taxes are higher than the Italian IRPEF, the cross-border worker is entitled to a refund; if lower, they must pay the difference. This mechanism is governed by the Double Taxation Convention of December 9, 1976, and represents the main protection against double taxation.

…

Frequently Asked Questions

Why is source tax withheld only in Switzerland and not in Italy?: According to the Convention for the avoidance of double taxation between Italy and Switzerland (signed on 9 December 1976), the right of primary taxation on the income of employees is the responsibility of the State in which the work is carried out, i.e. Switzerland. Italy recognizes this principle and avoids applying an additional tax: the border worker pays taxes only in Switzerland. In the Italian declaration (Form 730, EC Framework), it communicates the amount paid in Switzerland and obtains
What does transitional regime 2024–2033 mean and who benefits from it?: The New Frontier Agreement, which entered into force on 1 January 2024, distinguishes those who were already border workers before 17 July 2023 (old border workers) from those who acquired the qualification afterwards. Old frontier workers benefit from an exemption of €7,500 per year from Italian taxable income under the transitional regime until 31 December 2033. New frontier workers directly benefit from a deductible of €10,000. This means that the first €7,500 (or €10,000) of annual income is
How do I recover Swiss taxes on my Italian return?: In Form 730, fill in the CE Framework (foreign income) by entering the gross income declared in Switzerland, the taxes paid at source (withheld from Switzerland) and the applicable deductible. The Revenue Agency applies the Italian personal income tax to the net income (gross − deductible) and compares the result with the Swiss taxes paid. If the Swiss ones are higher, you get a refund; if lower, you pay the difference. The 730 is due by June 30 of the following year.
Is the Swiss LAMal mandatory for G Permit holders?: No. The border worker with G Permit resides permanently in Italy and has the right of option: they can maintain their registration in the Italian INPS system or join the Swiss LAMal. If you stay with INPS, you do not pay LAMal in Switzerland. If you choose the Swiss system, you will have to pay a monthly deductible premium between CHF 300 and CHF 2,500. The choice must be communicated to the employer and the competent body.
What is the difference between AVS, LPP and LAINF in the paycheck?: AVS is the federal mandatory old-age pension (first pillar): 5.3% of salary. LPP is the company pension (second pillar): 7–18% based on age, compulsory from 25 years. LAINF is insurance against occupational accidents: 0.7–1.5% of salary. All three are retained by the employer and paid to the relevant bodies (FOPH, company insurance company, SUVA). The border worker contributes throughout the duration of the employment relationship and accumulates pension rights in Switzerland.