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

Context

In brief

• The new tax agreement is in effect from January 1, 2024.
• Cross-border workers are subject to taxation in both Switzerland and Italy.
• The exemption for new cross-border workers is set at 10,000 euros.
• The tax credit avoids double taxation in the CE section of the 730 form.

Key facts

• What: New agreement between Italy and Switzerland on cross-border workers.
• When: In effect from January 1, 2024.
• Where: Border between the Canton of Ticino and Italy.
• Who: Italian Revenue Agency and Swiss tax authorities.
• Amount: Exemption of 10,000 euros for new cross-border workers.

Moving to Venegono Inferiore for those working in Ticino represents a strategic choice based on proximity to the border. With the new tax agreement coming into effect on January 1, 2024, ratified by Law 83 of June 13, 2023, the condition of cross-border workers has changed significantly. The agreement, originally signed on December 23, 2020, defines the framework within which labor and tax relations between the two countries operate. Switzerland, which is not a member of the EU or EEA, applies a withholding tax system, while Italy intervenes through the tax credit mechanism, completing the CE section of the 730 tax return to avoid double taxation.

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Operational details

Working in Ticino involves a series of mandatory deductions on the pay slip that every worker must know to manage their net income correctly. In addition to taxes, the Swiss pension system provides specific contributions: the AVS/AI/IPG, which amounts to 5.3% for the employee, and the AD/AC, which amounts to 1.1% up to a maximum of 148,200 CHF. These are added to the LAINF, whose rate varies between 0.7% and 1.5% depending on the sector of activity, and the second pillar (LPP), mandatory from the age of 25, with contributions ranging from 7% to 18% depending on the worker's age group.

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 moving to Venegono Inferiore, the procedure to regularize their status as a cross-border worker is marked by precise steps. The first step is obtaining the G permit, which authorizes cross-border work. Once hired, it is necessary to review your pay slip to understand the impact of deductions. It is crucial to keep track of all tax certificates issued by the Swiss employer, as they will be essential for the income tax declaration in Italy through the CE form. Managing the CHF-EUR currency exchange is another factor that affects real purchasing power. Many workers choose to open specific bank accounts to manage their salary in francs and convert it to euros at favorable times, using tools like the currency comparator. Before starting work, ensure you have verified LAMal insurance coverage and understood the deadlines for the Italian income tax declaration. Regularity of INPS contributions and correct payment of taxes in Switzerland ensure social protection, including future pensions, which integrate the Swiss pillars with the Italian system. For those with doubts about their pay slip, a calculator is available to simulate the tax impact and gain clarity on the net monthly income. Constant monitoring of regulations issued by the MEF and the Tax Agency, in accordance with the 1976 Convention on double taxation, is the best way to avoid penalties or errors in the declaration. Remember that any change in the contractual situation in Ticino must be correctly communicated to the competent authorities to maintain the validity of the G permit and the correct pension scheme. For comprehensive financial planning, always evaluate long-term projections related to AVS and LPP contributions.