Living in Caprezzo and working in Ticino as a border worker (cross-border guide)

Context

In a nutshell

• The New Frontier Agreement is in force from 1 January 2024.
• New frontier workers benefit from a tax exemption of 10,000 euros.
• The transitional regime for old frontier workers lasts until 2033.
• Switzerland is not a member of the European Union or the European Economic Area.

Key facts

• What: New Border Agreement between Italy and Switzerland
• When: Effective January 1, 2024
• Where: Canton Ticino and Italian border areas
• Who: Federal Tax Administration and Revenue Agency
• Amount: 10,000 euros deductible for new frontier workers

The transfer to Caprezzo for those working in Canton Ticino requires a clear understanding of the tax rules introduced by the New Agreement, signed on 23 December 2020 and ratified by Law 83 of 13 June 2023. This legislation has profoundly redefined the relationship between the two countries, surpassing the previous Double Taxation Convention of 9 December 1976. For workers, the key principle remains taxation at source carried out exclusively in Switzerland, while Italy avoids double taxation through the tax credit included in the EC framework of model 730.

The distinction between frontier workers

It is necessary to distinguish one's position between 'old' and 'new' frontiersmen. Those who were already border workers before 17 July 2023 fall under the transitional regime that will extend until 2033. For new frontier workers,

Operational details

Analysing the transfer to Caprezzo involves assessing the costs and obligations related to commuting. Switzerland, although not an EU or EEA member, guarantees frontier workers access to the Ticino labour market through the G Permit. The cost of living must be compared to Swiss wages, taking into account the mandatory deductions that appear in the paycheck. Social contributions include the AVS/AI/IPG at 5.3% for the employee, unemployment insurance (AD/AC) at 1.1% (up to the ceiling of CHF 148,200), the LAINF ranging from 0.7% to 1.5%, and the LPP, whose contribution ranges from 7% to 18% depending on the age group, mandatory from 25 years.

# Health management

A fundamental aspect for those who live in Italy and work in Switzerland is LAMal, health insurance. Border workers have the right of option, which allows them to choose between the Italian or Swiss health system. Applicable deductibles for adults usually range from CHF 300 to CHF 2,500, offering different coverage options. It is essential not to confuse this insurance with a generic health tax, as it is a specific coverage regulated by federal law. For those planning their monthly budget, confrontare il costo della vita between their residence and the workplace is a necessary step to assess the sustainability of the transfer. In addition, currency exchange management must be carefully considered,

Useful planning tools

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

Key points

For those residing in Caprezzo and working in Ticino, the operational procedure requires attention to deadlines and documents. The first phase consists of obtaining the G Permit, which is necessary to regularize one's employment status. In parallel, it is necessary to manage one's INPS position and verify the correct application of the withholding tax on the Swiss payslip. Tax documentation must be kept carefully for the completion of the tax return in Italy, where the tax credit will cover the taxes already paid in Switzerland, thus avoiding paying the amount due twice. Monitoring traffic at border crossings, such as the one in Brogeda, is a constant for those who have to manage daily travel times.

Operational steps

1. Verification of the employment start date to determine the application of the exemption (10,000 euros for new cross-border workers). 2. Choice of LAMal insurance or option for the Italian health system. 3. Preparation of documentation for the tax credit in the 730 form. 4. Constant monitoring of payslips to verify the correctness of AVS, LPP, and LAINF contributions.

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