Cross-border commuters over 20 km: how taxation changes (cross-border guide)

Context

In short

• New cross-border agreement in force from 1 January 2024
• Withholding tax withheld in Switzerland, tax credit in Italy
• Italian IRPEF: 23% up to €28,000, 35% up to €50,000, 43% above
• Declaration 730 with CE framework for reimbursement

Key facts

• What: New Italian-Swiss cross-border agreement on taxation
• When: Effective from 1 January 2024 (signed 23 December 2020)
• Where: Cross-border workers with G permit in the Canton of Ticino and Lombardy/Piedmont
• Who: Employed workers who travel from Switzerland on a daily basis
• Ratification Italy: Law 83 of 13 June 2023
• Old cross-border workers: €7,500 exemption, transitional regime 2024–2033
• New cross-border commuters: €10,000 deductible

The 2024 regulatory framework

On 1 January 2024, the New Cross-border Agreement signed between Italy and Switzerland on 23 December 2020 came into force. This regime change represents the most significant change in recent years for those who work in Switzerland and reside in Italy, introducing a distinction between already consolidated cross-border workers (prior to 17 July 2023) and new members. The Italian ratification law (Law 83 of 13 June 2023) has implemented this new tax structure, modifying the way in which taxes are calculated on the Swiss payroll and the declaration regime in Italy.

For cross-border commuters residing beyond 20 kilometers from the Swiss border, the calculation of tax benefits follows specific rules within this new structure. Cross-border workers who were already cross-border workers before 17 July 2023 benefit from an exemption of €7,500 per year, with a transitional regime extended until 2033. Anyone who registers as a cross-border worker after that date is entitled to an exemption of €10,000 per year, greater protection introduced by the new agreement.

…

Operational details

The structure of the calculation for those who live beyond 20 km

When a cross-border worker resides beyond 20 kilometers from the border, he or she remains subject to the same Italian IRPEF rates: 23% up to €28,000 of taxable income, 35% in the €28,001–50,000 range, 43% over €50,000. However, the calculation of the tax base takes into account the benefits provided by the New Agreement. For old cross-border commuters, the €7,500 exemption means that no IRPEF is paid on the first €7,500 of annual income (or rather, it is deducted directly from the tax base). For new cross-border commuters, the €10,000 deductible offers even greater protection.

The practical procedure requires the cross-border worker to calculate the gross income received in Switzerland (converted into euros at the average annual exchange rate if appropriate), subtract the amount of relief due (€7,500 or €10,000 depending on the category), and apply the IRPEF rates on the remainder. To this amount is added the regional surcharge (Lombardy or Piedmont, typically 1.23% in Lombardy) and the municipal surtax (variable from 0 to 0.9% depending on the municipality of residence).

Swiss withholding tax vs. Italian IRPEF

In the monthly practice, the cross-border worker receives a Swiss paycheck reduced by the Ticino withholding tax (Quellensteuer). This withholding tax is calculated by the State/Canton of Ticino coffers and paid directly to the cantonal administration. In Italy, the cross-border worker does not pay federal tax again on the same source: Italy grants a "tax credit" equal to the amount paid in Switzerland, to be used in 730.

Schematic example (hypothetical figures for illustration):

…

Key points

Calculation procedure and declaration: what to do concretely

The cross-border worker who lives beyond 20 km from the border must follow a precise procedure every fiscal year. In January, he receives the Swiss income certification (Lohnausweis, salary certificate) from the employer. This document specifies the gross amount, the withholding taxes carried out, the contributions paid and the net amount received. Keep the Lohnausweis: it is the fundamental document for Italian calculation.

Subsequently, between January and May (the 730 deadline is usually the end of May, although an extension has been introduced to June for cross-border workers), the cross-border worker presents form 730 to the Revenue Agency. In 730, Swiss income must be declared in part A (income from foreign employment). In the EC framework (credits and other elements), the amount of withholding tax paid in Switzerland must be indicated: this is the key to the refund. The Agency calculates the IRPEF on an Italian basis, applies the exemption/deductible (€7,500 or €10,000), and compares the outcome with the Swiss credit. If the Swiss withholding tax exceeds the Italian IRPEF, the cross-border worker receives a refund (reimbursement) automatically via bank transfer indicated in 730.

Operational checklist: 5 fundamental steps

Step 1 — Document collection (by January)

• Lohnausweis (Swiss salary certificate) from the employer
• Copy of Swiss bank statement (to verify net deposits)
• Documentation of Italian residence (certificate of registry, notarial deed of domicile)

Step 2 — Calculation of the tax base (February)

…