Living in Gignod and working in Valais as a border worker (cross-border guide)

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Exclusive taxation in Switzerland with tax credit in Italy.
• Deductible of 10,000 euros for new frontier workers.
• Exemption of 7,500 euros for historical frontiersmen.

Key facts

• What: New Italy-Switzerland Border Agreement
• When: Effective January 1, 2024
• Where: Italy-Switzerland working relations
• Who: Revenue Agency and Swiss authorities
• Amount: €10,000 excess (new)

Managing the cross-border employment relationship requires a precise knowledge of the regulations governing residence and taxation. The main regulatory reference point is the New Frontier Agreement, signed on 23 December 2020 and ratified by Law 83 of 13 June 2023, which entered into force on 1 January 2024. This regulatory framework establishes that taxation takes place exclusively in Switzerland, while Italy avoids double taxation through the tax credit mechanism in the EC framework of the 730 tax return.

The distinction between workers

The legislation applied varies significantly according to the start date of the activity. The so-called 'old frontier workers', i.e. those who were already such before 17 July 2023, benefit from a transitional regime that will last until 2033, with a tax exemption of 7,500 euros. On the contrary, the new frontier workers who started the employment relationship after the entry into force

Operational details

The Swiss contribution aspect is structured on several components that define the net paycheck. The employee is subject to deductions for AVS/AI/IPG, equal to 5.3%, and for AD/AC, equal to 1.1% up to a maximum ceiling of CHF 148,200. Added to these are the LAINF, with rates between 0.7% and 1.5%, and the LPP, which varies between 7% and 18% depending on the age group, from 25 years onwards. In Italy, personal income taxation follows the progressive steps: 23% up to 28,000 euros, 35% between 28,001 and 50,000 euros, and 43% over 50,000 euros.

Health and Social Security Management

With regard to health care, border workers with a G permit have the right of option for LAMal. This health insurance is not a tax, but a mandatory insurance, with adult deductibles ranging from CHF 300 to CHF 2,500. It is essential to constantly monitor the SECO and SEM directives for any updates on work permit procedures. Institutions such as INPS in Italy remain the referents for the monitoring of social security contributions, while the convention against double taxation, signed on 9 December 1976, remains the fundamental pillar of tax cooperation between the two countries. Switzerland, not being a member of the EU or the EEA, maintains specificities that require careful tax planning through the calcolatore tool to correctly simulate the payroll and the impact of withholdings.

Useful planning tools

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

Key points

Regularizing your tax position requires a meticulous procedure. Each border crossing must ensure that withholding taxes are correctly applied by the Swiss employer in accordance with cantonal and federal laws. When filing income tax returns in Italy, the use of the EC framework is mandatory to assert the tax credit, thus avoiding paying taxes twice on the same income. It is advisable to always keep accurate documentation of each paycheck and certifications issued by the Swiss employer, as these will serve as evidence for the Italian tax authorities.

Operational actions and tools

For those who work in Valais, planning must include managing currency exchanges and understanding the cost of living. Using a currency comparator can help mitigate fluctuations in the CHF/EUR exchange rate. In addition, for those who wish to deepen their social security or tax situation, the use of specialised consultancy remains the safest way to interpret the constantly evolving rules. We remind you that the rates are established exclusively by the competent authorities and not by the BFS, which deals only with statistical surveys, or by the UFAS, which manages social security. For any need to verify your financial situation, the first step remains the use of the calcolatore for the simulation of the monthly net,