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

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• Exclusive taxation in Switzerland for frontier workers.
• Tax credit in Italy to avoid double taxation.
• Tax exemption of 10,000 euros for new frontier workers.

Key facts

• What: New Frontier Agreement.
• When: Effective January 1, 2024.
• Where: Italy-Switzerland border, Canton of Ticino.
• Who: Italy and Switzerland.
• Amount: Deductible 10'000 euros for new frontier workers.

The transfer to Torno for those serving in the Canton of Ticino requires a precise understanding of the current regulatory framework, regulated by the new agreement signed on 23 December 2020 and fully operational from 1 January 2024. This document, ratified in Italy with Law 83 of 13 June 2023, introduced substantial changes for cross-border workers. Taxation is today based on the principle of taxation at source in Switzerland, with Italy guaranteeing the elimination of double taxation through the tax credit mechanism, to be indicated in the EC framework of model 730. For the so-called 'old frontier workers', i.e. those who worked in Switzerland before 17 July 2023, there is a transitional regime valid until 2033 with a deductible of 7,500 euros. On the contrary, for new frontier workers, the deductible is set at 10,000 euros. The Double Taxation Convention between Italy and Switzerland, originally signed on 9 December 1976,

Operational details

Analyzing the choice of living in Torno and working in Canton Ticino requires careful consideration of the dynamics of commuting and time organization. The modern border worker must integrate their daily life with the regulations governing the Swiss labor market. The Swiss salary, which can be simulated through the calculator tax calculator, reflects the withholding tax, which represents the main tax paid by the worker in the Swiss territory. Compared to the past, the new tax regime imposes a more accurate planning for those who must manage their Italian tax declaration, taking advantage of the tax credit to avoid double taxation on the same earnings. A crucial element is the management of the pension, particularly the second pillar (LPP) and the possible third pillar, fundamental tools for integrating future pensions. The competent authorities, such as the SECO or the Federal Administration of Contributions, provide official guidelines on how federal and cantonal tax rates are applied. The border worker must be aware that, despite the salary being received in Swiss francs, managing current expenses and living costs requires constant attention to the exchange rate, often monitored through a currency comparator.

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

For those who decide to settle in Torno, the procedure to start working in Ticino follows precise steps that guarantee the regularity of the relationship. The first step is to obtain the G permit, the document that authorizes cross-border work. Once employed, the worker must check that their employer correctly applies the source deductions, as provided for by cantonal and federal laws. It is essential to keep all documentation related to pay slips, as they will be necessary for the annual income tax declaration in Italy. To optimize financial management, it is possible to use the calculator to have a clear estimate of the net salary, considering the different Italian IRPEF tax rates (23% up to 28,000 euros, 35% up to 50,000 euros, and 43% beyond this threshold). Pension planning is another aspect that should not be overlooked: correctly informing oneself about the functioning of AVS and LPP, perhaps deepening the topic of pension, allows for a clear view of one's future pension. The commuting between Torno and Ticino also requires good organization of travel times, taking into account traffic flows at border crossings and public transportation options available in the Canton of Ticino.