Living in Lanzada, working in Graubünden: cross-border

Context

In Brief

• Tax withholding for border workers only occurs in Switzerland; Italy recognizes the tax credit through the 730 declaration
• From January 1, 2024, different thresholds apply: CHF 7,500 for historical border workers, CHF 10,000 for new ones
• G permit ensures access to Swiss AVS, LPP, LAMal with rights of choice

Key Facts

• What: Tax and pension regulation for Italy-Switzerland border workers
• When: New Border Workers Agreement in effect from January 1, 2024
• Where: Lanzada (Lombardy) → Graubünden (Switzerland)
• Who: Border workers with G permit
• Threshold: CHF 7,500 (old border workers, transitional regime 2024-2033) / CHF 10,000 (new border workers)
• Basic Convention: Double taxation Italy-Switzerland, signed March 9, 1976

Living in Lanzada and working in Graubünden as a border worker means operating in a regulatory framework defined by over 50 years of bilateral conventions between Italy and Switzerland. The Double Taxation Convention, signed on March 9, 1976, represents the pillar of transfrontier taxation: the employment income is taxed exclusively in the state where the border worker performs the activity, i.e. in Switzerland. Italy avoids double taxation through the tax credit in the income tax declaration (CE box of the 730 declaration). This means that the source tax withholding only occurs in Switzerland, where the tax is calculated on the pay slip according to the federal and cantonal rates of the Graubünden.

Starting from January 1, 2024, the New Border Workers Agreement, signed on December 23, 2020 and ratified by Italy with Law 83 of June 13, 2023, has come into effect. This agreement introduces a crucial distinction between border workers already resident at the time of signing the agreement (July 17, 2023) and new border workers. Historical border workers benefit from an exemption of CHF 7,500 on the taxable base, with a transitional regime covering the years 2024-2033. New border workers, on the other hand, enjoy a threshold of CHF 10,000. This differentiation has direct implications for taxation: lower taxable base means lower Italian tax burden, even if the Swiss gross income remains fully taxable in Switzerland.

G permit and declarative obligations

The border worker living in Lanzada and working in Graubünden operates with G permit (Residence permit for border workers). The rights of the G permit include freedom of movement, right to work, access to Swiss public services (healthcare, education) and participation in compulsory pension schemes (AVS, LPP, health insurance LAMal). The border worker also has obligations: declare the employment income in a timely manner both in Italy and in Switzerland, using the tax credit to avoid double taxation.

The income tax declaration in Italy remains an annual obligation. In the 730 declaration or the Unified Declaration, the border worker declares the gross income received in Switzerland, even if the withholding has already been made in the Swiss state. This allows the Italian Revenue Agency to verify the correct application of the threshold and liquidate any refunds if the overall Italian burden resulted lower than the withholding made.

A crucial aspect concerns the Swiss contributions for AVS (Old Age and Survivors Insurance), AI (Invalidity Insurance) and IPG (Loss of Earnings Indemnity): the withholding amounts to 5.3% on the pay slip for the employee, while the employer pays 5.3% as employer's contribution. For the accident insurance (LAINF), the withholding varies between 0.7% and 1.5%, at the employer's expense. The second pillar (LPP — Professional Pension Law) represents an additional burden, with rates ranging from 7% to 18% depending on the age range: border workers from 25 years old pay compulsory contributions. These amounts reduce the net Swiss pay slip, but guarantee complete pension coverage.

Operational details

Cost of living and economic benefits

Living in Lanzada, a mountainous commune in the Province of Sondrio in Lombardy, offers a significantly lower cost of living compared to the Swiss cantons of Graubünden. Italian rents, food, and services are cheaper: this is the main economic advantage of residing in Italy and earning a Swiss salary. A border commuter benefits from a higher Swiss gross salary (compared to Italy) but supports Italian living costs (which are generally lower), creating a positive economic differential. In addition, the border commuter has access to a €7,500 (for historical border commuters, until the end of 2033) or €10,000 (for new border commuters) exemption, further reducing Italian taxable income and overall tax burden.

Costs and drawbacks of relocation

The first drawback is the daily distance. From Lanzada to the main workplaces in the Graubünden (e.g., Davos, Chur), the journey is 50-100 km, typically requiring 1-2 hours by car. This entails significant fuel, vehicle wear, and unremunerated daily travel time costs. It is mandatory to have the Swiss highway vignette (approximately CHF 40/year) and potentially pay tolls for some border crossings. A commuter who travels 50 km/day should calculate at least CHF 300-500 per month for the overall car management.

Second drawback: the LAMal is mandatory. The Swiss health insurance has variable monthly costs (depending on the chosen health fund and deductible), plus a 10-20% share of medical expenses. A LAMal health fund with a CHF 300 deductible can cost CHF 300-400 per month (approximately €300-400), a sum that adds to Italian costs and represents an additional expense compared to Italian INPS coverage.

Third drawback: double taxation and social security declarations. Every year, the border commuter must submit the Italian 730 declaration (declaring the Swiss income) and coordinate with the Italian Revenue Agency for the correct application of the exemption. This requires in-depth tax knowledge or the help of a specialized tax consultant, with related consulting costs.

Considerations before relocation

Before relocating to Lanzada, the potential border commuter should carefully evaluate:

• Family situation: does the spouse and children benefit from Swiss LAMal or prefer to stay in Italy with Italian coverage? A family unit entails multiplied LAMal costs.
• Language skills: Italian is spoken in Lanzada, but German is prevalent in the Graubünden. Work integration requires at least a minimum German competence in the German-speaking cantons.
• Job stability: is the employment contract in the Graubünden stable or precarious? Job loss complicates the border commuter's situation and Italian residency.
• Complementary pension: is it worth subscribing to the Swiss 3a pillar, considering the remaining career time and pension horizon?

The Swiss pension advantage

In Switzerland, the AVS (mandatory pension, 5.3% employee), LPP (professional pension, 7-18% depending on age), and IPG (loss of earnings indemnity, 0.8%) system provides a very solid coverage. A border commuter who accumulates 30-40 years of Swiss contributions obtains a significantly higher Swiss pension compared to a single Italian INPS career. However, this advantage requires continuous employment contracts and correct annual declarations of the exemption to Italy to avoid double taxation issues.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

Step 1: Find a job in the Graubünden

The first step is to obtain a concrete job offer from a company in the Graubünden. The company must offer to support the G Permit procedure with the Graubünden cantonal authorities. It is not necessary to already reside in Switzerland: the G Permit can be requested once employment is found and the employment contract is signed.

Step 2: Request the G Permit

The employer sends the G Permit request (Permit to reside for border workers) to the SEM (State Secretariat for Migration) or the competent Graubünden cantonal authority. The procedure typically takes 2-8 weeks. The border worker receives the G Permit, a document that allows daily circulation from the Italian home (Lanzada) to the Swiss workplace (Graubünden). The permit has a multi-year validity and remains valid as long as the employment relationship persists.

Step 3: Anatomical registration and domicile in Lanzada

The border worker must register with the Lanzada municipality (Sondrio commune) as a resident. The following documents must be presented:

• Valid identity document (identity card or passport)
• Rental contract or property documentation
• Declaration of residence with the mayor

Registration is essential for tax purposes: the Italian Revenue Agency will use the Italian address for official communication and sending relevant obligations.

Step 4: Communication with the Italian Revenue Agency

The new border worker must inform the Italian tax authorities of their border worker status. This usually occurs during the first income tax declaration (730 or Unico), where the gross income from Swiss employment and the border worker status (to access the €10,000 exemption or the €7,500 transitional regime) must be indicated. The Agency verifies that the border worker has been registered in the Swiss migration registers (SEM).

Step 5: Signing the LAMal and opening a Swiss bank account

Once in possession of the G Permit, the border worker must:

• Sign up for the LAMal health insurance with a Swiss health insurance fund (mandatory within 3 months of starting work)
• Choose the exemption (CHF 300, 500, 1000, 1500, 2000, or 2500 per year) and health insurance fund according to their needs
• Open a bank account with a Swiss bank to receive the salary in CHF

The Italian Revenue Agency does not require additional formalities for coordination: the 1976 Convention automatically regulates the attribution of taxes.

Step 6: Annual income tax declaration

Every year, the border worker must:

• Receive the Certificate of Salary (Lohnabzug) from the Swiss employer, which reports the gross, contributions paid, and taxes withheld
• Submit the 730 or Unico in Italy, indicating the Swiss gross income and taxes paid in Switzerland
• Verify the calculation of the exemption (€7,500 or €10,000) and request any refunds if the taxes paid in Switzerland exceed the Italian due amount

This process is not automatic: the border worker (or a tax advisor) must verify annually that the declaration is correct and that no amount has been incorrectly double-withheld.

First day as a cross-border worker? Our practical guide walks you from cantonal registration to your first paycheck.