Living in Carate Urio and working in Ticino as a border worker (cross-border guide)

Context

In a nutshell

• Carate Urio is on Lake Como, a few kilometres from the border with the Canton of Ticino.
• The New Frontier Agreement is in force from 1 January 2024.
• Tax at source applies only in Switzerland on employee income.
• Old frontier workers: exemption €7,500, transitional regime 2024–2033.

Key facts

• What: New Agreement between Italy and Switzerland on border workers
• When: Signed on 23 December 2020, effective from 1 January 2024
• Where: Italy and Switzerland
• Who: Ratified in Italy by Law 83 of 13 June 2023
• What: Exemption for old border workers
• Amount: €7,500, transitional regime from 2024 to 2033
• What: Deductible for new frontier workers
• Amount: €10,000

Carate Urio is a small Italian town overlooking the western branch of Lake Como, in the territory between the city of Como and the Swiss border. Its location makes it potentially interesting for those considering a residential relocation while maintaining their job in the Canton of Ticino. The distance from the Chiasso/Brogeda pass is relatively limited, and the road connection to Lugano and the rest of the canton is mainly via the A2 motorway in Swiss territory.

For those who choose to reside in Carate Urio and work in Ticino with a G permit, the tax framework is governed by the New Border Agreement signed on 23 December 2020 and in force from 1 January 2024. The Italian ratification took place with Law 83 of 13

Operational details

Practical analysis: what changes for those who start from Carate Urio

Moving daily from Carate Urio to Ticino means entering the commuting flows that cross the border strip of Como, in particular the Chiasso/Brogeda crossing. It is the same route historically used by thousands of frontier workers residing in the province of Como, and familiarity with waiting times at crossings remains a concrete variable in the planning of the working day.

Taxation: what happens in the payroll

The Swiss employer applies the tax at source on the employee income of the border worker with G permit. The rates of Swiss social contributions are standard: AVS/AI/IPG 5.3% borne by the employee, AD/AC 1.1% with a ceiling of CHF 148'200, LAINF between 0.7% and 1.5%, and LPP with rates ranging from 7% to 18% depending on the age group, from 25 years. Italy, for its part, avoids double taxation through the tax credit mechanism indicated in the EC framework of the tax return, managed through INPS and the Revenue Agency.

For a border crossing resident in Carate Urio who exceeds the exemption threshold, the Italian personal income tax remains due: a rate of 23% up to €28,000, 35% between €28,001 and €50,000, 43% over €50,000. The actual tax burden therefore depends on the sum between Swiss source tax and Italian personal income tax, net of the recognised credit.

###

Useful planning tools

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

Key points

What to do concretely: procedure to become a cross-border worker from Carate Urio

The first step is signing an employment contract with a Swiss employer or starting a self-employed activity with a G permit. The G permit is issued by the competent cantonal authorities, based on checks carried out by the SEM at federal level. The required documentation typically includes the employment contract, proof of residence in the border zone, and identity documents.

Operational steps

1. Verify the border zone: Carate Urio falls within the municipalities of the border strip whose commuting to Ticino is historically well established. 2. Sign the Swiss employment contract and obtain confirmation of the G permit. 3. Enrol in the LPP pension fund and LAMal, choosing whether to exercise the option right for Swiss health coverage. 4. Communicate the new situation to INPS and the Italian Revenue Agency (Agenzia delle Entrate), for the correct management of the tax credit in section CE of the 730 form. 5. Plan the commute, taking into account the average crossing times at the Chiasso/Brogeda border crossing, which vary depending on traffic, weather, and roadworks on the A2.

Deadlines and tax obligations

The 2024–2033 transitional regime concerns old cross-border workers, with the €7,500 exemption gradually being reduced. New cross-border workers, from 2024, benefit from the €10,000 allowance. The Italian tax return must be filed indicating the foreign income in section CE to obtain the tax credit offsetting the withholding tax already paid in Switzerland.

…