Living in Gressan and working in Valais: border taxation (cross-border guide)

Context

In Brief

• New frontier agreement in force from January 1, 2024: revised tax rates, expanded exemptions to avoid double taxation.
• Source tax withheld exclusively in Switzerland; Italy recognizes tax credit within the EU framework of the 730.
• Old frontiersmen: CHF 7,500 exemption until 2033; new frontiersmen: CHF 10,000 exemption.

Key Facts

• What: Tax agreement between Italy and Switzerland for frontiersmen
• When: Entered into force January 1, 2024
• Where: Canton Valais (place of work)
• Who: Italian residents working in Switzerland
• Tax: Withheld only in Switzerland (AVS 5.3%, AI 5.3%, IPG 1.1%)
• Exemption: CHF 7,500 (old frontiersmen), CHF 10,000 (new)
• Basic Convention: Signed December 9, 1976

The fiscal regime for residents in Valle d'Aosta working in Valais

The new agreement between Italy and Switzerland, entered into force on January 1, 2024, has introduced significant tax innovations for frontiersmen. Unlike other areas, the source tax on income is withheld exclusively in Switzerland. Italy does not apply parallel taxes: it recognizes a tax credit within the EU framework of the 730 to avoid double taxation.

Those residing in Gressan or other municipalities in the Valle d'Aosta and working in Valais are subject to the Swiss frontier regime. The applicable rates are:

• AVS (pension): 5.3% at the expense of the employee
• AI (invalidity): 5.3%
• IPG (unemployment): 1.1%
• LAINF (non-professional accident insurance): 0.7–1.5%

The new agreement distinguishes between frontiersmen already so before July 17, 2023 (old frontiersmen) and new frontiersmen. Old frontiersmen benefit from an annual exemption of CHF 7,500 until 2033. New frontiersmen are entitled to a CHF 10,000 exemption. This mechanism significantly reduces the tax burden in the first years.

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Operational details

How the tax and contribution payment flow works

Every month, the Swiss employer withholds from the paycheck the tax at source according to the federal and cantonal rates of the Valais. At the same time, contributions are paid for AVS, AI, IPG and LAINF, which represent a form of financing for Swiss social security. At the end of the calendar year, the Swiss tax administration (AFC — Federal Administration of Contributions) issues the border crossing a certificate certifying the total amount of taxes and contributions paid.

This document is essential: it must be kept for the Italian tax return. Without it, it will not be possible to prove to the Revenue Agency the amount of foreign tax paid and therefore you will not be able to benefit from the tax credit.

The tax return: the 730 form and the CE framework

In Italy, the border worker declares income in form 730. Swiss gross source income should be included in the EC framework. The Revenue Agency compares the tax paid in Switzerland with the Italian tax due on the same taxable basis. If the Swiss tax is higher, nothing is due in Italy and sometimes a credit is generated that can be used in subsequent years. If the Swiss tax is lower, the differential must be paid in Italy.

For those living in the border area with cross-border incomes, it is crucial to keep: -

Useful planning tools

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

Key points

Operational Procedures: Concrete Steps to Follow

Step 1: Verify Effective Residency in Italy The first requirement is to be registered as a resident in Italy. In the case of Gressan, registration is required with the Comune of Gressan in the Italian civil records. Residency must correspond to the habitual place of residence. Required documentation: rental contract, bills in the name, cadastral certificate, or a declaration with the municipality of registration.

Step 2: Request the G Permit from the Valais Authorities The Swiss employer requests the G Permit (Frontier Permit) for the employee with the competent cantonal authority in Valais. This permit authorizes the frontier worker to work in Switzerland while remaining a resident in Italy. Approval times vary, but generally take around 2-3 weeks. The permit is valid for one or more years and can be renewed.

Step 3: Inform the Italian Revenue Agency Once employed in Valais, the frontier worker must inform the Italian Revenue Agency of their frontier worker status and foreign income. This is done through the 730 model (completed by a CAF or in autonomy) or the Unico model, depending on the complexity of the income situation.

Step 4: Maintain Annual Swiss Documentation Every year, the frontier worker must keep:

• Certificate of Withholding (Quellensteuer-Bestätigung) issued by the Valais tax authority
• Monthly pay slips
• Updated G Permit documentation
• Any official communication received from the cantonal authority

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