Living in Besano and working in Ticino: a practical guide (cross-border guide)

Context

In a nutshell

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

Key facts

• What: Tax at source on income from work.
• When: Effective January 1, 2024.
• Where: Canton of Ticino and Italy.
• Who: Federal Tax Administration (FTA).
• Amount: Deductible of 10,000 euros for new frontier workers.

Commuting between Besano, in the province of Varese, and the Canton of Ticino is a well-established housing choice for many cross-border workers. Managing your job requires knowledge of the rules in force, particularly after the new tax agreement comes into force on 1 January 2024. The provisions, ratified in Italy with Law 83 of 13 June 2023, clearly define the methods of taxation. For frontier workers operating in the Canton of Ticino, employee income is subject to a tax at source withheld directly in Switzerland. This taxation excludes, pursuant to the agreement, double taxation, thanks to the tax credit mechanism provided for in the EC framework of the Italian model 730. It is essential to remember that Switzerland is not an EU or EEA member, therefore the tax dynamics follow the Double Taxation Convention signed on 9 December 1976, updated by the agreements

Operational details

Practical Implications for the Worker

The life of a resident in Besano is directly influenced by social security and tax regulations. The Swiss contributory system, in addition to contributions for AVS/AI/IPG, also requires the payment of LAINF (accident insurance), which varies between 0.7% and 1.5% of the salary, and participation in the second pillar (LPP). The LPP, mandatory for workers over 25 years old, provides a savings rate that ranges from 7% to 18% depending on the age group. It is essential to constantly monitor one's payroll to ensure that the deductions correspond to the applicable regulations. For those who settled in Besano before July 17, 2023, a transitional regime applies, which provides an exemption of 7,500 euros, valid until 2033. For new border workers, the exemption is set at 10,000 euros. The Revenue Agency, in collaboration with the MEF, monitors the correct application of the tax credit, which allows recovering in Italy the taxes paid in Switzerland, ensuring that the overall tax burden does not exceed the amount provided for the income produced. Compared to the previous situation, the new agreement has introduced greater clarity, although it requires more attentive management of financial documents. Family budget planning must include not only taxes, but also LAMal premiums, which represent a significant fixed expense. For those working in Ticino, it is possible to deepen salary and tax dynamics using a calculator to simulate one's net income. The proximity of Besano to the border crossings allows for a regular commute, but managing fixed costs, such as the second pillar or health insurance, remains a key element for the economic sustainability of the family unit. A correct understanding of these dynamics allows approaching the daily commute…

Key points

Procedures and daily management

For a border resident living in Besano, the management of the working position requires a series of operational steps. First, it is necessary to ensure that you have a valid G permit, which attests the right to work in Switzerland as a resident in Italy. The documentation must always be up-to-date and in accordance with the provisions of the SEM (State Secretariat for Migration). In case of need for medical assistance, the choice between the Italian system and the LAMal must be made within the terms provided by the right of option. The LAMal, although being an obligatory insurance, offers several options for deductibles that allow for the monthly premium to be modulated according to one's needs. As for the pension part, the payment to the INPS in Italy is not provided for the AVS contributions, which are paid exclusively in Switzerland. However, it is essential to keep all the documentation related to the contributions paid in the Canton of Ticino for the correct compilation of the CE table of the model 730. The procedure for declaring income must be followed with attention, availing oneself of professionals or certified computer tools to avoid errors that could result in fines. For workers who need a precise estimate of their net salary, considering the current tax and contributory rates, the use of a dedicated calculator is the most effective tool. In addition, it is advisable to constantly monitor the official communications of the Federal Administration of Contributions (AFC) for any updates on the tax rates or withholding tax procedures. Long-term financial planning, including the management of the second pillar (LPP), must be integrated into the family budget to ensure an adequate pension. For those who wish to delve deeper into…