Living in Ronago and working in Ticino as a border worker

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Withholding tax withheld in Switzerland, tax credit in Italy.
• Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).
• 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: New IT-CH Frontier Agreement
• When: From 1 January 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 Ronago and the Canton of Ticino is a well-established reality for many workers who choose to reside in Italy serving in Swiss territory. With the entry into force, on 1 January 2024, of the new tax agreement signed on 23 December 2020 and ratified with Law 83 of 13 June 2023, the regulatory landscape has undergone substantial changes. Taxation takes place at source in Switzerland, while Italy avoids double taxation through the tax credit mechanism, filling in the EC framework of model 730. The Convention against Double Taxation between Italy and Switzerland, signed on 9 March 1976, remains the fundamental pillar of reference. It should be remembered that Switzerland is not a member of the European Union or the European Economic Area, therefore work dynamics are regulated by specific bilateral treaties. The management of rates and contributions is established by federal and cantonal laws,

Operational details

Practical implications for the cross-border commuter

Choosing to live in Ronago involves daily management of commutes to the main Ticino employment hubs. The proximity to the border allows for easy access to the Mendrisiotto area, but traffic at border crossings, such as Brogeda, remains a factor to consider when planning schedules. From a healthcare perspective, cross-border commuters working in Switzerland are subject to the LAMal, known as health insurance. There is a right of option, which allows for the choice of insurance coverage, with adult deductibles ranging from 300 to 2,500 CHF. It is not a 'health tax', but a mandatory coverage system necessary to access healthcare services. Comparing the situation prior to 2024 with the current one, workers must pay attention to the correct declaration of income in Italy. The tax credit, managed through the CE section of the tax return, is the tool to prevent the same income from being taxed twice. The Swiss social security system, consisting of the first pillar (AVS/AI) and the second pillar (LPP), guarantees pension coverage that integrates with the Italian system. For those moving to or living in Ronago, it is advisable to constantly monitor official communications from entities such as SECO or cantonal authorities, which provide updated data on the labor market. Differences between the various cantons, although Ticino is the primary reference, can influence the withholding tax rate, administered by the AFC. Using tools like the calculator allows for simulating the net salary, considering mandatory AVS, ALV, and LPP deductions. This simulation exercise is essential for those who need to plan fixed expenses in euros, considering that the CHF/EUR exchange rate affects the real purchasing power of the worker residing in Italy. Managing the cost of living between the two countries requires a careful analysis of current expenses, including transport costs and insurance premiums, which can vary based on the choice of health insurance fund and the applied deductible. Transparency in relations with the Italian Revenue Agency (Agenzia delle Entrate) and proper documentation of payments made in Switzerland ensure tax compliance.

Useful planning tools

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

Key points

Operational procedure for cross-border commuters

For those working in Ticino while residing in Ronago, the first step is the correct management of the G permit. The document must be requested and renewed according to the procedures established by the SEM. Once the employment contract is obtained, it is necessary to inform your employer about your status as a cross-border commuter, as this affects the withholding tax. Documentation regarding AVS and LPP payments must be kept carefully, as it will be required during the tax return process in Italy for the determination of the tax credit. It is advisable to verify your contribution status annually via the AVS statement, which can be requested from the relevant compensation funds. Regarding LAMal insurance, the cross-border commuter must exercise the right of option within the established deadlines by submitting the necessary documentation to the competent cantonal authority. The choice of deductible should be made based on the expected frequency of medical care, keeping in mind that a higher deductible reduces the monthly premium but increases the amount borne by the insured in case of need. Tax planning must include keeping every payslip and the annual salary certificate, documents that are essential for the CAF or the tax consultant handling the tax return. Periodic consultation of updated guides and the use of digital tools, such as the calculator for the payslip, help maintain a clear view of net income. In case of doubts regarding the correct application of tax regulations, it is always advisable to refer to the indications provided by the MEF or local offices of the Revenue Agency. Maintaining a personal checklist of documents and deadlines, including the terms for submitting the 730 form, is the best strategy to avoid penalties and optimize your tax burden. Monitoring the exchange rate is another recommended daily activity for those who receive their salary in Swiss francs but face expenses in euros, in order to mitigate the impact of financial market fluctuations on their household economy.

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.