Tax Refunds for Cross-Border Workers: How They Work

Context

TL;DR

• Tax refunds return part of cross-border workers' income tax to Italy for border municipalities
• Ticino owes 109.1 million CHF in 2026, of which 50.2 million has been suspended as a precaution
• 40% of the tax paid by existing cross-border workers goes to Italy, 60% stays in Switzerland
• Refunds are transferred by June 30 annually

Key facts

• 2026 total: 109'110'460 CHF (Lombardy 100'442'354, Piedmont 8'668'106)
• Precautionary suspension of 30 June 2026: 50'221'177 CHF for Lombardy; 58'889'283 CHF paid
• Share kept in Switzerland: 60%
• Italian municipality share: 40% of the gross tax (Article 9 of the 2020 agreement), until tax year 2033
• Share under the 1974 agreement (until 2023): 38.8% (40% reduced in 1985)
• Agreement: 23 December 2020, in force since 17 July 2023 and applied from 1 January 2024, replacing the 1974 agreement
• Transfer deadline: June 30 of the following year
• Main beneficiaries: Lombardy municipalities near Chiasso, Ponte Tresa, and Gaggiolo
• Sources: Italy-Switzerland cross-border workers agreement (Law no. 83 of 13 June 2023); Swiss Federal Council message of 11 August 2021 (FF 2021 1917); Ticino Council of State, 30 June 2026; Ticino tax administration, 2026 withholding tax table A

What is the tax refund mechanism?

Tax refunds are one of the most debated aspects of cross-border work between Lombardy and Canton Ticino. Each year, a portion of the income taxes paid by cross-border workers in Switzerland is transferred to Italy for the border municipalities, as part of a bilateral agreement. In 2026, Ticino owes 109.1 million CHF, highlighting the importance of this system for Italian municipal administrations.

📊 Key data on tax refunds in 2026:

• Total: 109'110'460 CHF, of which 50'221'177 CHF suspended as a precaution
• Share of the tax transferred to Italy: 40% (60% stays in Switzerland)
• Main beneficiaries: Lombard municipalities near the Chiasso, Ponte Tresa, and Gaggiolo border crossings

Until 2023 the mechanism was governed by the 1974 tax agreement, under which, from 1985, Ticino transferred 38.8% of the tax to Italy and kept 61.2%. Since 1 January 2024 the agreement of 23 December 2020, in force since 17 July 2023, applies: for existing cross-border workers, who are taxed only in Switzerland, Ticino transfers 40% of the gross tax to Italy until tax year 2033: the share kept in Switzerland has not been increased, it fell from 61.2% to 60%. In 2026 the "health tax" announced by Lombardy caused new tensions between Lombardy and Ticino.

'Tax refunds are a fundamental contribution for Italian border municipalities, but their future will depend on the stability of bilateral agreements with Switzerland,' says a source from the DFE (Department of Finance and Economy of Ticino).

Operational details

How are they calculated and who pays them?

The calculation of tax refunds starts from the withholding tax levied on the cross-border worker's salary, which depends on gross income and on the applicable tax table. For example, in 2026 a cross-border worker without children (table A0) earning 50'000 CHF gross annually pays a withholding tax of 6.80%. Of this amount, 60% stays in Switzerland, while 40% is transferred to Italy for the border municipalities.

💡 Practical example: A cross-border worker from Como with a gross income of 50'000 CHF and a rate of 6.80% will pay around 3'400 CHF in withholding tax. Of this amount, 2'040 CHF will remain in Switzerland, while 1'360 CHF will be transferred to Italy as financial compensation.

⚠️ Important deadlines:

• Tax refunds are calculated annually and transferred by June 30 of the following year.
• For existing cross-border workers, the salary is taxable only in Switzerland. New cross-border workers generate no compensation: Switzerland levies at most 80% of the withholding tax and the income must also be declared in Italy, which eliminates double taxation.

The Canton transfers the compensation to Italy, with separate shares for Lombardy and Piedmont. The Italian authorities, in coordination with the Regions, then redistribute it to the municipalities with an adequate presence of cross-border workers.

Key points

What is the future of tax refunds?

Amid new tensions between Switzerland and Italy, the future of tax refunds remains uncertain. On 30 June 2026 the Ticino Council of State paid 58'889'283 CHF and suspended as a precaution 50'221'177 CHF destined for Lombardy (46% of the total), considering the Lombard "health tax" a breach of the tax agreements between Switzerland and Italy. In any case, the compensation provided by the 2020 agreement ends with tax year 2033. Some political parties in Ticino have already proposed further reducing the refunds to fund local projects.

💡 Practical tips for cross-border workers:

• Regularly check your declared income to avoid issues with the Italian tax authorities.
• Use our tax refund tracker to monitor the amounts returned to your municipality.
• If you work in Ticino, assess the fiscal impact on your personal finances with the net salary calculator.

📅 Sources: Agreement between Italy and Switzerland on the taxation of cross-border workers, Article 9 (Italian Law no. 83 of 13 June 2023, https://www.gazzettaufficiale.it/eli/id/2023/06/30/23G00087/sg); Swiss Federal Council message of 11 August 2021, FF 2021 1917 (https://www.fedlex.admin.ch/eli/fga/2021/1917/it); Ticino Council of State, "Versamento dei ristorni", 30 June 2026 (https://www4.ti.ch/tich/area-media/comunicati/dettaglio-comunicato/?NEWS_ID=260164); Ticino tax administration, 2026 withholding tax table A (https://m4.ti.ch/fileadmin/DFE/DC/DOC-IF/Aliquote_2026/Ticino_tabella_A_2026.pdf). For more details on tax refunds and their impact on cross-border workers, visit our cost of living comparator.