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

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Tax at source withheld exclusively in Switzerland.
• Italy avoids double taxation via tax credit.
• Deductible of 10,000 euros for new frontier workers.

Key facts

• What: New Frontier Agreement
• When: 1 January 2024
• Where: Switzerland and Italy
• Who: Federal Tax Administration (AFC/ESTV)
• Amount: 10,000 euros deductible for new frontier workers

Cross-border commuting between the municipality of Allein, in the Aosta Valley, and the Canton of Valais in Switzerland is governed by the rules in force since 1 January 2024, the date of entry into force of the new Frontier Agreement signed on 23 December 2020. This agreement, ratified by Italy with Law 83 of 13 June 2023, has introduced structural changes for those who work across borders. Switzerland, which is not a member of the EU or the EEA, applies a system of taxation based on source taxation, managed at the federal and cantonal level, never by the UFAS or the BFS. Italy, to avoid double taxation, allows workers to apply for the tax credit in the EC framework of model 730, respecting the provisions of the Italian-Swiss Convention of 9 December 1976. ### New tax rules For workers who started the activity after the entry into force of the agreement, a deductible of 10,000 euros applies. For the so-called 'old frontier workers', already before 17 July 2023,

Operational details

Practical analysis of commuting requires a clear understanding of social contributions and payroll deductions. The employee in Switzerland is subject to AVS/AI/IPG contributions equal to 5.3% of gross salary and an unemployment insurance (AD/AC) quota of 1.1%, the latter calculated on a ceiling of CHF 148,200. To these figures are added the LAINF, which varies between 0.7% and 1.5%, and the LPP occupational pension, which varies between 7% and 18% depending on the age group, with an obligation to contribute from the age of 25. ### Health and social security management Each border crossing has the right of option for LAMal, the compulsory health insurance, which allows you to choose the deductible, varying between 300 and 2500 francs for adults. It is essential to distinguish these benefits from taxes: tax rates are defined by the cantonal authorities and the AFC/ESTV, while social security management is separate. On the Italian side, personal income tax follows progressive steps: 23% up to 28,000 euros, 35% for the 28,001-50,000 euro range and 43% for higher incomes. The correct management of these cash flows is essential to avoid errors in the tax return. Digital tools such as calcolatore fiscale can help estimate the monthly net, considering that the Swiss system does not provide for the application of personal income tax directly in the paycheck, but requires independent management in Italy through the

Useful tools for your case

To verify your within/over 20 km tax scenario, use the net salary calculator and the tax return guide.

Key points

For those residing in Allein and working in Valais, the procedure to regularize one's position requires constant attention to fiscal deadlines. It is necessary to monitor one's pay slip in accordance with the directives of the SECO and the relevant cantonal administration. The first step is the correct request for the G Permit, necessary to exercise work activity in Swiss territory. Subsequently, it is indispensable to inform oneself about the compulsory insurance coverage, in particular LAMal, carefully evaluating the available deductible options to optimize annual costs. ### Operational Steps 1. Verification of the income threshold for the application of Italian IRPEF tax rates. 2. Correct compilation of the CE table of the income tax return for the application of the tax credit. 3. Verification of one's pension position, including management of the INPS for any past periods in Italy. 4. Use of the exchange rate comparator to monitor fluctuations between CHF and Euro, which directly affect the real purchasing power of the salary. Financial planning must also include the evaluation of the second pillar (LPP) and the possibility of contributions to the third pillar 3a for private pension. In case of doubts about taxation or the correct application of conventions, it is advisable to consult the official guides provided by the competent authorities. For a precise simulation of one's net salary, including compulsory contributions and tax estimates, it is recommended to use the payslip simulator available on our portal, which allows for precise calculation of the impact of the new fiscal agreement on one's monthly income.