Living in Luino and working in Ticino as a border worker

Context

In brief

• The new tax agreement is in effect from January 1, 2024.
• Cross-border workers are subject to withholding tax in Switzerland.
• Italy applies a tax credit to avoid double taxation.
• Commuting requires managing Swiss contributions and Italian taxes.

Key facts

• What: Cross-border commuting between Italy and Switzerland.
• When: Effective from January 1, 2024 (New Agreement).
• Where: Border between Italy (Luino) and Canton Ticino.
• Who: Cross-border workers residing in border areas.
• 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.

Commuting between Luino and Canton Ticino is a well-established lifestyle choice for many workers, requiring a precise understanding of the current regulatory framework. From January 1, 2024, the new agreement on cross-border workers, signed on December 23, 2020, and ratified with Law 83 of June 13, 2023, introduced structural changes for those working across the border. Income from work is taxed in Switzerland via withholding tax, while Italy eliminates double taxation through the tax credit mechanism, to be declared in the CE section of form 730.

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. It is essential to remember that Switzerland is not a member of the EU or EFTA, and relations are governed by the Double Taxation Convention signed on March 9, 1976. Swiss social contributions, such as AVS/AI/IPG (5.3% paid by the employee), AD/AC (1.1% up to a cap of 148,200 CHF), and contributions LAINF (0.7–1.5%) and LPP (7–18% depending on age), are deducted directly from the paycheck. Tax rates are established by federal and cantonal laws, managed by the Federal Revenue Administration (AFC) and cantonal administrations, while statistical monitoring is entrusted to the Federal Office of Statistics (BFS). Consult the tax calculator for an estimate of the net monthly income.

Operational details

The commute between Luino and Locarno or other locations in Ticino requires careful planning of costs and bureaucratic procedures. Compared to the past, the distinction between old and new frontiersmen is the central node for financial planning. Those who fall under the transitional regime must carefully monitor their tax position to optimise the tax burden between the two countries. The management of pensions, including the pension pillars (AVS and LPP), requires knowledge of the current ceilings and rates, which are not managed by the UFAS but defined at the federal law level.

With regard to health care, border workers working in Ticino have the right of option between the Swiss system (LAMal) and the Italian one. The choice of LAMal allows access to healthcare services in Switzerland, with deductibles ranging from CHF 300 to CHF 2,500 for adults. It is advisable to carefully evaluate this option, considering that it is not a health tax, but a mandatory insurance with specific rules for those residing in Italy and working in Switzerland. Transport costs, including those for using motorways or public transport, represent a significant item of expenditure. Analizza il costo della vita to compare expenses between Luino and Ticino cities.

The regulatory stability guaranteed by the new agreement allows workers to have a clearer vision in the long term, eliminating the

Useful planning tools

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

Key points

For those who choose to live in Luino and work in Ticino, the startup process is marked by precise steps. The first step is obtaining permit G, which is necessary to carry out the work activity. Subsequently, it is essential to register with the Swiss social security system and to select the health insurance scheme, exercising the right of option within the established deadlines. It is crucial to keep all documentation related to the payslip, as the data contained therein are needed for the Italian tax return.

Financial management is not limited to just the payslip. It is advisable to constantly monitor the CHF/EUR exchange rate, as currency fluctuations directly affect the worker's real purchasing power. Choosing a bank that offers favorable conditions for cross-border workers can simplify daily money management and transfers. Check banking options to optimize savings management. Additionally, it is useful to periodically consult official guides to stay updated on changes in LPP rates or on thresholds for tax exemption.

In case of unemployment, the cross-border worker must interact with the relevant authorities to request benefits, following the directives regulating the relationship between INPS and Swiss offices. Knowledge of Italian tax deadlines, particularly for submitting the 730 form, is crucial for anyone wishing to maintain a compliant status. To deepen your specific situation, you can use online calculators that allow you to simulate the net monthly income, taking into account social security and tax deductions applied at source in Switzerland.

Article 1(237–238) of Italian Law No. 213/2023 does not apply indiscriminately to all cross-border workers. It covers: (a) Italian residents who work and stay in Switzerland and use the Italian SSN; (b) frontier workers under Article 9(1) of the Italy–Switzerland Agreement whose income is taxable only in Switzerland and who exercised the legal right to choose health insurance; and (c) dependants of those two categories. Paragraph 238 sets a progressive 3–6% share of net Swiss salary, with a €30 minimum and an ordinary €200 maximum for each month worked from 2024. The cap may be doubled in cases of omitted payment or omitted communication specified in Article 1(100) of Law No. 207/2024. The Region of residence sets the rates and procedure each year.