Border VAT number: taxation, AVS and double taxation (cross-border guide)

Context

In a nutshell

• From 1 January 2024: deductible €10,000 new frontier workers, €7,500 + transitory (2024–2033) previous frontier workers
• Tax at source collected only in Switzerland; tax credit in Italy through CE 730 framework
• AVS/AI 5.3%, LPP 7–18% by age group: mandatory contributions for self-employed Swiss

Key facts

• What: Self-employment (VAT number) by border workers in Switzerland
• When: From 1 January 2024 (entry into force of the New Frontier Agreement)
• Where: Canton of Ticino and Italy-Switzerland border crossers with G Permit
• Who: Self-employed persons registered with Swiss tax authorities (AFC/ESTV)
• Deductibles: €10,000 new frontier workers; €7,500 (+transitional 2024-2033) previous frontier workers
• Convention: Double taxation signed 9 December 1976

January 1, 2024 marked a crucial date for freelance border workers in Switzerland. The New Frontier Agreement, signed on 23 December 2020 and ratified by Italy with Law 83 of 13 June 2023, revolutionised the taxation of self-employed workers resident in Italy but operating across borders. For those who manage a VAT number in Switzerland, the tax and social security implications are profound and require careful planning.

The central challenge: avoiding double taxation. The Italian-Swiss Convention signed on 9 December 1976 provides the legal framework, but the new agreement introduces more favourable mechanisms. The tax at source on

Operational details

Mandatory Social Security Contributions: Swiss vs. Italian System

Opening a VAT number in Switzerland as a cross-border worker means not only dealing with income taxation, but also integrating into the Swiss social security system. Unlike employees, whose contributions are withheld by employers, self-employed workers must pay mandatory contributions independently, calculated on declared net income.

The AVS (Old-Age and Survivors' Insurance) and AI (Disability Insurance) represent the first pillar of the Swiss pension system: self-employed cross-border workers pay 5.3% of net income for these contributions. Unemployment benefits (AD) and non-occupational accident insurance (LAINF) add a further 0.7–1.5%. For occupational accidents, direct registration with SUVA is required.

The second Swiss pillar, the LPP (mandatory occupational pension scheme), represents the greatest economic challenge. Rates vary significantly by age group: 25–34 years (~7%), 35–44 years (10%), 45–54 years (15%), and 55+ until retirement (18%). This system is considerably more expensive than contributions managed by Italy's INPS (approximately 20% gross for a VAT number in Italy, but distributed differently).

Explore Swiss pension details with our AVS/LPP calculator

LAMal: Mandatory Health Insurance

Often underestimated by the self-employed: cross-border workers in Switzerland are legally required to take out health insurance (LAMal) with a cantonally recognized insurer. Unlike Italy's INPS, LAMal is a genuine insurance contract covering medical and hospital services. Deductibles for adults range from CHF 300 to CHF 2,500 annually, with the option to choose coverage levels based on acceptable risk and budget.

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Key points

Step-by-step: Opening a VAT number as a cross-border worker

The procedure requires coordination between Swiss and Italian authorities and is divided into sequential steps. Here are the key steps:

1. Valid Permit G. If not already held, the cross-border worker must register with the competent authorities to obtain Permit G, a prerequisite for legally operating as a self-employed individual in Switzerland. Check your rights and permit procedures

2. Registration with Swiss tax authorities (AFC/ESTV). The cross-border worker registers their self-employed activity with the Federal Tax Administration and the competent cantonal administrations. Here, they declare the legal form (sole proprietorship, partnership, etc.), expected income, and access information on cantonal taxation and withholding tax.

3. Registration with the Italian Revenue Agency. In parallel, the cross-border worker informs the Italian Revenue Agency of their self-employed activity in Switzerland. This ensures correct taxation in Italy and access to tax credits in the CE section of the 730 declaration.

4. Mandatory LAMal registration. As soon as operations begin in Switzerland, registration for health insurance becomes mandatory. The cross-border worker contacts a cantonally recognized insurer and chooses their preferred coverage model and deductible.

5. SUVA registration for occupational accidents. If the activity involves risks, SUVA requires direct registration. Some sectors are excluded (pure liberal professions), while others are mandatory (crafts, trade).

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