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

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Withholding tax withheld in Switzerland, tax credit in Italy.
• Exemption of 7,500 euros for old border workers.
• Deductible of 10,000 euros for new frontier workers.

Key facts

• What: New IT-CH Frontier Agreement
• When: From 1 January 2024
• Where: Canton of Ticino and Italy
• Who: Federal Tax Administration (FTA)
• Amount: Deductible 10,000 euros (new frontier workers)

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 December 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…

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…