Living in Porto Ceresio and working in Ticino as a border worker

Context

In a nutshell

• New Frontier Agreement in force from 1 January 2024.
• taxation in Switzerland with tax credit in Italy.
• Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).
• Deductible of 10,000 euros for new frontier workers.

Key facts

• What: Tax regime for cross-border workers.
• When: Effective January 1, 2024.
• Where: Canton of Ticino and neighbouring Italian territory.
• Who: Federal Tax Administration (FTA).
• Amount: Deductible 10,000 euros for new frontier workers.

Commuting between Porto Ceresio and the Canton of Ticino is a well-established choice for thousands of workers who cross the border every day. With the entry into force of the new tax agreement on 1 January 2024, ratified in Italy with Law 83 of 13 June 2023, the methods of taxation of employee income have undergone a fundamental regulatory evolution. The main rule states that income tax is only withheld in Switzerland, surpassing the previous system of concurrent taxation. To avoid double taxation, Italy applies the tax credit method, which must be managed correctly when filing taxes through the EC framework of Form 730.

The distinction between old and new frontier workers

The legislator provided for a specific transitional regime to protect those already employed in Switzerland before 17 July

Operational details

The organisation of cross-border work requires precise knowledge of Swiss social security deductions and insurance obligations. In addition to taxation, the worker is subject to mandatory contributions that finance Swiss social security. Among these, the AVS/AI/IPG accounts for 5.3% of gross salary, while unemployment insurance (AD/AC) is 1.1% up to a salary ceiling of CHF 148,200. To these items are added accident insurance premiums (LAINF), which vary between 0.7% and 1.5% depending on the sector, and occupational pension (LPP), with rates between 7% and 18% based on the age of the worker, calculated from 25 years.

Health management and mobility

With regard to health care, G border workers have the right of option for health insurance (LAMal). You need to understand that this is not a 'health tax', but a compulsory insurance with deductibles ranging from CHF 300 to CHF 2,500 for adults. The Swiss health system is governed by the FOPH/BAG and by federal law, which is distinct from the tax powers of the AFC. For those residing in Porto Ceresio, mobility towards Ticino implies constant planning, considering that border crossings such as those towards Mendrisio or Lugano may undergo changes in traffic. It is always advisable to check the conformity of your permits, such as the G permit, which certifies the status

Useful planning tools

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

Key points

Managing your position as a cross-border worker requires constant attention to annual deadlines. For those working in Ticino, the first step is to ensure that the Swiss employer correctly applies the withholding tax. Subsequently, in Italy, it is necessary to proceed with the tax return using the 730 form and correctly filling out the CE section to claim the tax credit for taxes paid in Switzerland, thus avoiding double taxation on the same income. It is advisable to monitor your payslip to verify that the AVS, LPP, and LAINF deductions are consistent with the current legal percentages. For those who need a projection of their net salary, it is possible to use the dedicated calculator, which allows you to simulate the impact of social and tax deductions based on your specific contractual situation.

Operational checklist for cross-border workers

The documentation to keep includes the Swiss salary certificate, which is essential for the tax return in Italy, and the documentation related to the chosen LAMal option. In case of doubts regarding tax residency or the correct application of the transitional regime, it is appropriate to consult the circulars of the Revenue Agency (Agenzia delle Entrate) and the indications provided by the MEF. Do not forget that Switzerland is not a member of the EU/EEA, therefore the reference regulatory framework remains that of the bilateral agreements. To learn more about the calculation of net income and evaluate the tax impact, it is suggested to regularly access the available simulation tools. Conscious use of these tools allows you to face cross-border work with greater peace of mind, having a clear understanding of the available monthly net income and the social security obligations necessary for your pension. Tax planning, integrated with proper management of the second pillar (LPP) and any third pillar, forms the basis for a solid financial management of your cross-border professional path between Porto Ceresio and Ticino companies. For a precise estimate, consult the calculator to simulate your net payslip.

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.