How to calculate source tax in Ticino (cross-border guide)

Context

In a nutshell

• Tax at source in Switzerland is withheld by the employer, not in both countries
• From 1 January 2024, the exemptions change: €7,500 for old border guards, €10,000 for new ones
• Old frontier workers: transitional regime until 2033
• The Italian tax credit in 730 avoids double taxation

Key facts

• What: Calculation of the tax at source on the Swiss border workers' paycheck
• When: From 1 January 2024 (new agreement signed 23 December 2020)
• Where: Ticino Canton, Brogeda, Chiasso, Gaggiolo passes and CH-Italy border
• Who: Employed border workers working in Switzerland
• Base rate: AVS/AI/IPG 5.3% + AD/AC 1.1% + LAINF 0.7–1.5% + LPP 7–18%
• Old-age exemption: €7,500 per year (transitory until 2033)
• New exemption: €10,000 per year (permanent)

The tax at source in Switzerland affects the incomes of border workers who pass every day from the passes of Brogeda, Chiasso and Gaggiolo to reach the companies of Ticino and Lombardy. But how exactly is it calculated? And what was new about the new agreement ratified on 1 January 2024?

The tax is withheld directly by the employer and represents a percentage of your gross. Let's dispel a myth right away: it is not paid in both countries, but ONLY in Switzerland. Italy avoids double taxation through the tax credit, which you fill out in the EC framework of declaration 730.

The new December 2020 agreement (effective January 1, 2024)

Operational details

The Tax Credit Rule

This is where the Convention between Italy and Switzerland of 9 December 1976 comes into play, confirmed by the new agreement: you pay the tax ONLY in Switzerland. To avoid double taxation, Italy applies the tax credit. How does it work?

In your Italian 730, fill in the CE table reporting: the Swiss source tax actually paid during the year; the days of work in Switzerland; the gross income from cross-border work. The Revenue Agency calculates the credit based on the Italian rate you are entitled to (23%, 35% or 43% depending on your tier) and compares it with what you have already paid in Switzerland. If you have paid less, pay the difference; if you have paid more than due in Italy, you recover it as a credit. Refer to nostra guida alla dichiarazione 730 for details on compiling the CE Framework.

Warning: this mechanism only works if your employer has correctly withheld the tax from you in Switzerland. If they did not do so by mistake, you are still liable to the Swiss tax authorities.

Difference between old and new frontier workers

Here the novelty of 2024 is decisive. If you were already a border worker before 17 July 2023, you must apply: exemption of €7,500 per year (transitional regime until 2033). It means that the first part of your salary up to €7,500 is not subject to tax at source, the rest is normally calculated according to the rates. If you became frontier workers after that date:

Useful planning tools

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

Key points

Step 1: Gather your documents

From your December payslip (or your employer's annual statement), download: gross annual salary; withheld withholding tax (specific line item on the certificate); detailed OASI/IV/EO, ALV, UVG, BVG contributions; days of actual work (needed for the Italian tax return 'Modello 730').

Step 2: Check the applied exemption

Ask your employer or your employer's tax advisor if the €7'500 (old cross-border commuters) or €10'000 (new cross-border commuters) exemption has been applied correctly. If you fall right on the border between the two regimes (which is rare), keep written confirmation of the date you officially became a cross-border worker. This document is required by the Italian tax authority in case of an audit.

Step 3: Use the simulator

Access our tax calculator: enter your gross annual salary, select 'Ticino–Italy cross-border commuter', indicate the year (2026), and the system will show you the calculated withholding tax; detailed contributions for each item; estimated monthly net salary; amount to recover or pay in your '730' tax return.

Step 4: Fill out the Italian 730 tax return

In Section CE ('quadro CE'), report the tax withheld from your Swiss payslip. If the amount is lower than the Italian tax due according to your tax bracket (23–43%), you pay the difference; if it is higher, you recover it as a tax credit in the same section.

Step 5: Keep everything

Archive in a single folder: monthly payslips (originals or PDFs from the company portal); annual tax certificate (if provided by the employer); receipts of tax payments from Switzerland (available via ESTV or Swiss portal); submitted '730' tax return and receipt from the Italian Revenue Agency ('Agenzia delle Entrate').

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