Living in Besano and working in Ticino: a practical guide

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Tax at source withheld in Switzerland.
• Tax credit in Italy to avoid double taxation.
• For Article 9 of the Agreement, “old frontier workers” are people who met the tax requirements and worked in Graubünden, Ticino or Valais on 17 July 2023 or during the period from 31 December 2018 through 17 July 2023. Article 9 keeps covered employment income taxable exclusively at source in Switzerland; other workers follow the ordinary regime, with ordinary taxation in Italy, a credit for Swiss tax and Swiss withholding at 80% of the ordinary rates. The €10,000 figure in Article 4 of Italian Law No. 83/2023 is only the income limit referred to in Article 1(175) of Law No. 147/2013; it is not a general allowance for new frontier workers. Sources: ESTV factsheet (Italian) · Agreement, Art. 9 · Law No. 83/2023, Art. 4.

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).
• The €10,000 limit is not a general allowance: Article 4 of Italian Law No. 83/2023 applies it only to the income referred to in Article 1(175) of Law No. 147/2013.

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 March 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. Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement). The €10,000 limit is not a general allowance: Article 4 of Italian Law No. 83/2023 applies it only to the income referred to in Article 1(175) of Law No. 147/2013. 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 with serenity, avoiding surprises at the time of income tax declaration and maximizing the pre-retirement benefits provided by the Swiss system.

Useful planning tools

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

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 the job opportunities in the Canton of Ticino or understand better the dynamics of the cost of living between Italy and Switzerland, online tools are available that provide a clear picture of the current economic situation. Maintaining a rigorous management of permits, insurance, and tax declarations is the key to living in Besano and working in Ticino successfully and with peace of mind.