Moving to Cannobio as a border crosser: pros and cons

Context

In a nutshell

• The new Frontier Agreement is applied since 1 January 2024.
• Taxation takes place at source in Switzerland.
• Italy applies the tax credit to avoid double taxation.
• The The Article 9 transitional regime applies only to workers who meet the Agreement’s definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; covered employment income is taxable exclusively in Switzerland. The ordinary regime applies in other cases, with Italian taxation and credit for Swiss tax where applicable. The €10,000 in Article 4 of Law 83/2023 is only the income limit referred to in Article 1(175) of Law 147/2013, not a general allowance. FTA factsheet · Agreement, Article 9 · Normattiva, Article 4.

Key facts

• What: New Borderers Agreement.
• When: Effective January 1, 2024.
• Where: Italian-Swiss border, Canton of Ticino.
• Who: Italy and Switzerland.
• The €10,000 threshold in Article 4 of Italian Law No. 83/2023 applies exclusively to employment income earned continuously and exclusively by Italian residents in a foreign border area or neighbouring country, as referred to in Article 1(175) of Law No. 147/2013; it is neither a general allowance nor an exemption from Swiss withholding tax.

The transfer to Cannobio for a worker serving in Canton Ticino represents a choice that profoundly affects daily tax and logistics management. With the entry into force of the new tax agreement, signed on 23 December 2020 and operational from 1 January 2024, the regulatory framework has been redefined for frontier workers. The Italian ratification law 83 of 13 June 2023 enshrined the new rules governing the cross-border employment relationship. A central element is taxation: the source tax is withheld in Switzerland, while Italy, to avoid double taxation, recognizes a tax credit through the EC framework of model 730. For those who move today, it is essential to distinguish between their status as a 'new frontier worker' and that of 'old frontier workers' already active before 17 July 2023. Old cross-border workers remain taxed only in Switzerland (Art. 9 of the 2020 Agreement).

Operational details

Analyzing the transfer to Cannobio means carefully evaluating the time of movement to the place of work in Ticino. Cross-border commuting is affected by the viability and proximity to major border crossings. For those who work in the Ticino public or private sector, the choice of living in Cannobio offers a specific quality of life, but involves the need to plan the daily commute. Unlike those who live near the great passes such as Brogeda, the resident in Cannobio must consider the lacustrine viability. From a tax point of view, compliance with withholding tax is managed by the FTA, which applies the rates established by cantonal and federal laws. It is important not to confuse the functions of bodies such as the BFS, which deals with statistics and not with setting tax rates, with those of tax administrations.

Comparison of tax regimes

The difference between the status of 'old' and ' new ' frontier creates a scenario in which the net tax burden may vary according to the date of commencement of employment. The transitional regime of Article 9 of the Agreement applies only to those who meet the conventional definition and worked in Graubünden, Ticino or Valais between 31 December 2018 and 17 July 2023; the covered employment income is taxed exclusively in Switzerland. In other cases, the ordinary regime applies, with Italian taxation and credit for Swiss tax. The 10,000 euros of Article 4 L. 83/2023 are only the limit for income referred to in Article 1, paragraph 175, L. 147/2013, not a general deductible. [AFC Card] (https://www.estv.admin.ch/dam/it/sd-web/Zbr5Jb-40aYm/int-laender-it-faktenblatt-faqs-it.pdf) · [Agreement, Art. 9] (https://www.fedlex.admin.ch/eli/cc/2023/410/it) * Standard, art. 4. This calculation requires the use of calculator to simulate the real impact on disposable income. As far as health is concerned, the frontier worker is entitled to an option for LAMal, the Swiss compulsory insurance, which provides deductibles ranging between 300 and 2,500 francs. It is a common mistake to define this as a' health tax'; it is a private insurance regulated by federal law. The choice between the Italian and Swiss health systems must be weighted according to your family and work needs. The advice of an expert on refunds or the use of tools for cost of living can help to better define whether the family budget actually benefits from the transfer.

Useful tools for your case

For practical verification of your scenario within/beyond 20 km, use the net salary calculator and the tax return guide.

Key points

The procedure for those who decide to move to Cannobio requires a rigorous checklist. First of all, it is necessary to regularize your position with the municipality of residence and communicate the change of address to the Swiss tax authority through your employer, who acts as withholding agent for withholding tax. It is essential to maintain precise documentation of all contributions paid, including those relating to LPP and AVS, to facilitate the correct tax return in Italy through the EC 730 framework, thus avoiding double taxation. For those who need to manage their assets, choosing a bank that operates on both sides of the border can simplify daily transactions.

Operational steps for cross-border workers

The first step is to verify your work permit. The G Permit is the standard document that certifies the status of a cross-border worker and must be updated in the event of a change of residence. Subsequently, it is advisable to evaluate KVG insurance coverage. If you decide for the Swiss option, the procedure requires taking out a policy with an authorized health insurance company. Regarding income management, using a calculator allows you to accurately estimate the impact of Swiss withholdings and Italian taxes. Furthermore, to optimize pension savings, many cross-border commuters consider opening a third pillar in Switzerland, which offers interesting tax deductions. Planning must also include management of transportation costs. Anyone who uses their own car must consider the costs of maintenance and management of the Swiss motorway vignette. Finally, for those who have doubts about their contribution or tax position, it is advisable to regularly consult the Revenue Agency portal for the latest interpretative circulars on the taxation of cross-border workers. The constant use of tools such as calculator ensures financial management that is always up to date and compliant with current regulations.

Law 213/2023, art. 1, paragraphs 237–238, does not subject all cross-border workers without distinction. This includes: (a) residents of Italy who work and stay in Switzerland and use the SSN; (b) the cross-border workers referred to in art. 9, par. 1, of the Italy-Switzerland Agreement, with taxable incomes only in Switzerland, who have exercised the right of option for health insurance; and (c) dependent family members of the two categories. Paragraph 238 provides for a progressive quota of 3–6% of the Swiss net salary, with a minimum of €30 and an ordinary maximum of €200 for each month worked from 2024. The ceiling can be doubled in cases of non-payment or non-communication provided for by the art. 1, paragraph 100, Law 207/2024. The Region of residence determines the rates and methods every year.