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

Context

In a nutshell

• New tax agreement in force from 1 January 2024.
• Tax at source withheld exclusively in Switzerland.
• Tax credit in Italy to avoid double taxation.

Key facts

• What: CH-IT border tax regime
• When: Effective January 1, 2024
• Where: Canton of Ticino and Italy
• Who: Federal Tax Administration (FTA)
• Amount: Deductible €10,000 for new frontier workers

The move to Montorfano for those working in the Canton of Ticino involves adapting to the rules of the new tax agreement between Italy and Switzerland, signed on 23 December 2020 and fully operational from 1 January 2024. This regulatory framework, ratified by Italy with Law 83 of 13 June 2023, defines the methods of taxation of employee income. The legislation establishes that the tax at source is withheld only in Switzerland, while ensuring that Italy avoids double taxation through the application of the tax credit in the EC framework of model 730. For workers who started the frontier activity after the entry into force, a tax exemption of 10,000 euros is provided. It is important to distinguish this category from the so-called old frontier workers, those who operated in Switzerland before 17 July 2023: for the latter, the law provides for a deductible of 7,500 euros and a transitional regime that extends from 2024 to 2033. The Convention against Doubles

Operational details

The analysis of the cost of living and tax burdens represents an essential step for those who choose to settle in Montorfano working in the Canton of Ticino. From a pension point of view, the Swiss paycheck suffers from different mandatory deductions that vary according to the age and profile of the worker. The LPP, for example, provides for contributions between 7% and 18% depending on the age group, with an obligation to contribute from the age of 25. In parallel, the worker must consider the right of option for LAMal, the Swiss compulsory health insurance, which has deductibles ranging from CHF 300 to CHF 2,500 for adults. It should be noted that decisions on rates are not the responsibility of other bodies such as the UFAS, which deals with social security, but are the responsibility of the cantonal and federal administrations. ### Tax differences and taxation With regard to taxation in Italy, the income produced is subject to the current income tax brackets: 23% up to 28,000 euros, 35% for the range between 28,001 and 50,000 euros and 43% for the part exceeding 50,000 euros. The deductible mechanism, introduced with the new agreement, aims to protect the frontier worker's net income. A strong point for those planning the transfer is the possibility of optimising their tax burden through the correct use of the tax credit. The comparison between the previous situation, characterized by

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

The procedure for those starting work in Ticino while residing in Montorfano requires an operational checklist to avoid formal errors. The first step is the correct management of the G permit, which is essential for the regularity of one's working stay. Once the permit is obtained, the worker must ensure that their company correctly applies the withholding tax. Subsequently, it is crucial to keep all documentation useful for the tax return in Italy, particularly the annual salary certificates issued by the Swiss employer. These certificates are indispensable for filling out the CE section of the 730 form, which allows for claiming the tax credit for taxes already paid in Switzerland. For those who want a precise estimate of their net salary, the tax calculator is available, allowing for a simulation of deductions based on the gross salary provided by the Swiss contract. ### Obligations and useful tools Italian legislation provides that income from employment performed abroad, on a continuous basis and as the exclusive object of the relationship, is taxed according to the provisions of conventions against double taxation. It is essential for the cross-border commuter to maintain accurate traceability of their payments, including LPP contributions and mandatory health insurance premiums. A common mistake is underestimating the tax impact when income exceeds the higher IRPEF tax bracket thresholds. Managing the third pillar also represents a prudent choice to supplement professional pension schemes. Regarding travel, knowledge of traffic flows at border crossings is a skill acquired through direct experience. It is recommended to regularly consult the official guides provided by specialized portals to stay updated on legislative changes that may occur in the coming years. Attention to the correct completion of the tax return in Italy remains the most critical activity of the entire fiscal year to avoid disputes with the Revenue Agency. Finally, constant comparison between income in Swiss francs and expenses in euros, given market volatility, suggests using appropriate financial monitoring tools to protect one's purchasing power.