Border permit G: advantages and disadvantages

Context

In Brief

• New Cross-Border Worker Agreement in force from 1 January 2024
• Withholding tax levied only in Switzerland, no double taxation
• Existing cross-border workers: exemption €7,500, new cross-border workers: €10,000
• Permit G allows job mobility among Swiss employers

Key Facts

• What: Permit G for cross-border work
• When: New Agreement in force from 1 January 2024 (signed 23 December 2020)
• Where: Ticino-Italy border (checkpoints Brogeda, Chiasso, Gaggiolo)
• Who: Residents in Italy working in Switzerland
• Amount: Exemption €7,500 (pre-17 July 2023), €10,000 (post-17 July 2023)

Permit G represents the most common status for those residing in Italy and working in Switzerland, particularly in the Ticino-Italy cross-border region. From 1 January 2024, with the entry into force of the New Cross-Border Worker Agreement (signed on 23 December 2020 and ratified in Italy with Law 83 of 13 June 2023), the regulatory and tax framework governing cross-border work has undergone significant changes.

Taxation represents one of the central aspects of Permit G. Contrary to what many believe, withholding tax on employment income is levied only in Switzerland, not in both countries. This principle, established by the Italy-Switzerland Double Taxation Convention of 9 March 1976, avoids double taxation. Italy recognizes the tax credit in the EC section of the tax return (form 730), allowing cross-border workers to recover what is owed to the Swiss tax authorities.

The structure of the new agreement

The New Cross-Border Worker Agreement introduced a differentiated exemption scheme depending on the date when cross-border worker status began. Cross-border workers who already held the status before 17 July 2023 ("existing cross-border workers") benefit from an exemption of €7,500 under the transitional scheme that will last until 2033. "New cross-border workers" (those acquiring the status from that date onwards) are entitled to an exemption of €10,000. This differentiation reflects the intent to protect those who had already established their position in the Swiss labor market.

From the perspective of general taxation, a cross-border worker with Permit G is subject to the Swiss tax regime on income derived from employment. Using the cross-border worker salary calculator you can simulate the tax impact of your personal situation. The Italian IRPEF rates apply to additional income or residual income in Italy, with progressive brackets: 23% up to €28,000, 33% from €28,001 to €50,000, and 43% above €50,000.

Operational details

Tax and social security benefits

The G Leave offers a considerable advantage from a social security point of view. Contributions paid in Switzerland (AVS/AI/IPG at 5.3% as an employee share, plus AD/AC at 1.1% with cap CHF 148'200, and LAINF accident coverage between 0.7% and 1.5%) are recognised by the Italian INPS system. This means that the frontier earns years of contribution recognised by both countries, a crucial advantage for future retirement. The LPP (Swiss Occupational Pillar Old Age Insurance), with rates ranging from 7% to 18% depending on the age group from 25 onwards, also makes it possible to constitute a significant second pillar.

From a health point of view, the border worker with Permit G has the right of option to choose between Swiss health insurance (LAMal) and Italian health insurance. LAMal, the mandatory health insurance in Switzerland, provides deductibles for adults ranging from CHF 300 to CHF 2,500, depending on the insurance product chosen. This flexibility allows the border crosser to assess which system offers the best protection in relation to their specific needs and economic situation.

Work mobility: advantages and limitations

Another advantage of the G Permit concerns work mobility within the Swiss territory. The border worker can change employer with simplified administrative procedures, maintaining the status

Key points

How to Choose Permit G and Proceed

The choice between Permit G and other forms of authorization (such as Permit B for residents) depends on a careful evaluation of personal costs and benefits. If the cross-border worker has family, children in Italian schools, real estate property in Italy, or other significant ties in Italian territory, Permit G remains the most advantageous solution. Especially for old cross-border workers (status pre-July 17, 2023), the exemption of €7,500 and the transitional regime until 2033 represent a favorable taxation opportunity.

Conversely, if the intention is to settle permanently in Switzerland (perhaps for a marriage relationship, children in Swiss schools, or long-term work in Switzerland), the Residential Permit B could be more convenient from a fiscal and administrative perspective, eliminating the double income tax reporting and mobility costs.

Practical Procedure and Deadlines

To maintain or request Permit G, the cross-border worker must:

1. Enter into a dependent employment contract with an employer registered in Switzerland 2. Declare stable residence in Italy with the municipal authorities 3. Register with the Population Office (SEM) of the competent jurisdiction 4. Complete the Swiss tax return annually with the Federal Tax Administration (AFC) or the competent cantonal administration 5. Submit the 730 form annually in Italy, indicating the Swiss tax credit in section CE

Any change of employer requires notification to the competent Swiss authorities, although procedures have been simplified with the New Agreement 2024.

When Permit G is Really Worthwhile

Permit G is worthwhile if: the difference in taxation between Switzerland and Italy is significant (the work is well-paid), the family remains stably in Italy, the cross-border worker intends to maintain social and educational rights in Italian territory, the distance from the Swiss workplace is manageable (e.g., Chiasso, Mendrisio, Lugano for the Canton Ticino).

Permit G is less worthwhile if: income is low (Italian IRPEF rates start at 23% anyway), daily mobility costs exceed 10–15% of net salary, stay in Switzerland is intended as semi-permanent (more than 200 days per year).

Simulate your personal tax situation using the cross-border worker salary calculator to verify if Permit G is the right choice for you. Also consult the resources on cross-border income tax return and tax credit and on supplementary pension with the third pillar 3a to optimize your cross-border financial planning.