Living in Fenegrò and working in Ticino as a border worker

Context

In brief

• Withholding tax applied in Switzerland
• New Cross‑border Agreement in force from 1° gennaio 2024
• The €10,000 threshold in Article 4 of Italian Law No. 83/2023 applies exclusively to employment income earned continuously and exclusively by Italian residents in a foreign border area or neighbouring country, as referred to in Article 1(175) of Law No. 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax.
• Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).

Key facts

Cross‑border Agreement: signed 23/12/2020, effective 01/01/2024 Italy ratification: Law 83 of 13/06/2023 Double‑tax convention: 09/03/1976

Tax withholding: in Switzerland

The choice to reside in Fenegrò to work in the Canton of Ticino fits into a precise regulatory framework, mainly governed by the New Cross-Border Workers Agreement signed on 23 December 2020 and in force since 1 January 2024. This agreement, ratified in Italy by Law 83 of 13 June 2023, defines the tax parameters for those who cross the border daily. Switzerland, although not a member of the EU/EEA, maintains stable relations with Italy also based on the Convention to avoid double taxation signed on 9 March 1976.

The applicable tax regime

For those who work in Ticino and reside in Fenegrò, the withholding tax on employment income is withheld in Switzerland. Italy avoids double taxation through the application of a tax credit, which the taxpayer must indicate in the CE section of the income tax return (model 730). This mechanism ensures that the tax burden is correctly managed between the two states, without the worker paying the full tax in both countries.

The management of tax rates, both at federal and cantonal level, is the responsibility of the Federal Tax Administration (AFC/ESTV) and the respective cantonal administrations. It is important to note that entities such as the Federal Statistical Office (BFS) or UFAS are respectively responsible for data collection and social security, and they have no authority in setting tax rates. For those who wish to analyse the impact of these withholdings on their salary, it is possible to use a calculator to estimate the net monthly amount.

Operational details

The analysis of the convenience of living in Fenegrò involves evaluating different tax scenarios depending on the start date of the cross-border activity. The current system clearly distinguishes between those who were already cross-border workers before 17 July 2023 and those who started afterwards.

Differences between new and old cross-border workers

Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). Conversely, The Article 9 transitional regime applies only to workers who meet the Agreement’s definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; covered employment income is taxable exclusively in Switzerland. The ordinary regime applies in other cases, with Italian taxation and credit for Swiss tax where applicable. The €10,000 in Article 4 of Law 83/2023 is only the income limit referred to in Article 1(175) of Law 147/2013, not a general allowance. FTA factsheet · Agreement, Article 9 · Normattiva, Article 4. This distinction is fundamental for calculating taxable income in Italy and for the possible determination of the tax credit.

From the perspective of social contributions, the Swiss system provides precise deductions that affect the payslip. The AVS/AI/IPG contributions are set at 5,3% of the employee's salary, while the unemployment insurance (AD/AC) absorbs 1,1%, with a maximum ceiling of 148.200 CHF. To these is added the LAINF, which ranges from 0,7% to 1,5%, and the occupational pension scheme LPP, with rates varying between 7% and 18% depending on the age bracket, starting from age 25.

The cost of living and health insurance

Living in Italy and working in Switzerland allows you to optimize the cost of living, but introduces the obligation to manage health insurance (LAMal). Cross-border workers with a G permit have an option right that allows them to choose between the Swiss system and that of their country of residence. In the case where LAMal is chosen, deductibles for adults range from 300 to 2,500 CHF. To compare the impact of these expenses relative to the Swiss salary, it is recommended to consult the data on cost of living between Ticino and Italy.

Key points

For those who decide to move to Fenegrò and start working in Ticino, it is necessary to follow a strict administrative procedure to regularize their tax and social security position.

Operational steps for the cross-border worker

The first step consists of obtaining the G permit, the document that attests to the status of a cross-border worker. Once employment begins, the employer will proceed with the withholding of tax at source, which will be paid to the Swiss tax authorities. In parallel, the worker must monitor the contributions paid to AVS and LPP for the future pension.

In Italy, the Revenue Agency and the MEF manage the receipt of income produced abroad. It is essential that the cross-border worker correctly files the tax return, using the CE section of the 730 form to request the tax credit and neutralize double taxation, as provided for by the 1976 Convention. For those who have doubts about completion or amounts, it is possible to use a simulator for the tax return.

Management of deadlines and entities

It is essential to keep track of communications coming from AFC/ESTV regarding taxes and from INPS for possible pension coordination. If one opts for Swiss health insurance, it is necessary to define the LAMAL deductible within the prescribed deadlines to avoid penalties or limited coverage.

For those who are still in the evaluation phase of the move, analyzing gross salary versus social security and tax withholdings is the starting point. Calculating precisely how much will remain in pocket after withholding tax and LPP contributions is the only way to correctly plan the family budget in Fenegrò. To obtain an accurate estimate, we suggest using our salary calculator.