Cross-border commuters over 20 km: how taxation changes

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, 33% 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.

How withholding tax works

A fundamental aspect to understand is the withholding tax mechanism (Quellensteuer). In Switzerland, the cross-border worker's salary is subject to a withholding directly from the pay slip, calculated by the employer according to the federal, cantonal and municipal rates of Ticino. This withholding tax is NOT paid in Italy either: the prohibition of double taxation is guaranteed by the Convention between Italy and Switzerland (signed on 9 March 1976). Italy recognizes the Swiss payment through the tax credit, a mechanism that is activated in the tax return (form 730, EC framework) presented to the Revenue Agency.

The mandatory Swiss contributions (AVS/AI/IPG at 5.3% for the employee, AD/AC at 1.1% up to CHF 148,200 of annual income) are paid by the employer in Switzerland and flow into the Swiss social security system. For the cross-border worker, these payments build the social security position towards the AVS and the second pillar (LPP), two pillars which remain distinct from the Italian social security managed by the INPS.

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, 33% 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):

• Gross annual income Switzerland: CHF 60,000
• Swiss withholding tax (average rate): CHF 8,000
• Net income in Switzerland: CHF 52,000
• Euro conversion (exchange rate 1.05): €48,571
• Italy tax base (after €7,500 exemption): €41,071
• IRPEF 23% on €28,000 + 33% on €13,071: €6,440 + €4,313 = €10,753 (gross)
• Swiss tax credit (CHF 8,000 at 1.05): €7,619
• IRPEF to be paid in Italy: €10,753 - €7,619 = €3,134
• If the Swiss withholding tax (CHF 8,000) exceeds the Italian IRPEF, the cross-border worker receives a refund (reimbursement)

This calculation explains why many cross-border workers receive refunds in their tax returns: the Swiss system withholds more taxes than Italy requires, thanks precisely to the franchise/exemption guaranteed by the New Agreement.

Old vs. new cross-border workers: timeline and transitional regime

Italian Law 83/2023 has established a transitional regime that protects old cross-border workers (already such before 17 July 2023) by extending the exemption of €7,500 until 2033. During this period, old cross-border workers continue to benefit from the traditional amount, while new members (from 17 July 2023 onwards) receive the more generous exemption of €10,000 from the start. In 2034, the transitional regime expires and even the old cross-border workers will move to €10,000, aligning with the new standard.

This temporal distinction is crucial for tax planning: a cross-border commuter who registers in 2026 or 2027 will be entitled to €10,000 immediately, while one who was already registered in 2023 will have to wait until 2034 to access this amount (unless he formally registers as "new" at a later time, which is rare).

Swiss social security contributions and implications

In addition to the withholding tax, the cross-border worker sees a total of approximately 8-10% contributions paid to his Swiss social security position (AVS/AI 5.3%, AD/AC 1.1%, LAINF 0.7–1.5%, LPP 7–18% depending on age). These are not taxed in Italy (they are payments to Swiss institutions), but they reduce the income available for the calculation of IRPEF. The Swiss AVS accumulates years of contributions which, upon reaching the Swiss retirement age (65 for men, 64 for women, evolving), guarantees an annuity. The G permit allows this duplication of coverage (Swiss AVS + possible Italian INPS integration), without double contribution penalties.

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)

• Sum the Swiss gross income for the calendar year (January–December)
• Convert into euros at the average annual exchange rate declared by the Revenue Agency (available online)
• Subtract the exemption amount (€7,500 for old, €10,000 for new): you will get the Italian tax base

Step 3 — Calculation of gross IRPEF and additional taxes (February)

• Apply 23% to the first €28,000 of the base
• Apply 33% to the €28,001–50,000 range
• Apply 43% over €50,000
• Add regional surcharge (Lombardy 1.23%, Piedmont 1.85%)
• Add municipal surcharge (0–0.9%, varies by municipality of residence)
• Add it all: it is the gross Italian IRPEF due

Step 4 — Quantification of the Swiss tax credit (February)

• Reports the total amount of withholding tax paid in Switzerland by the Lohnausweis
• Convert to euros at the average exchange rate
• This is your tax credit (EC framework of 730)

Step 5 — Compiling 730 and sending (March–May)

• Fill out form 730 indicating Swiss income, exemption, IRPEF, credit
• Send electronically via CAF, patronage, qualified professional, or directly if you use the Revenue Agency software
• If the credit exceeds the IRPEF due, you will receive a refund; If your income tax exceeds the credit, you may owe a difference

Practical tools and assistance

To simplify the calculation, many cross-border commuters use calcolatori online di busta paga which automatically applies Swiss federal/cantonal rates and Italian IRPEF rates. These tools are useful for making estimates throughout the year and verifying the net amount you will receive. However, the official statement remains that of 730.

The CAFs (Tax Assistance Centres) present in Ticino and in the border provinces (Como, Varese, Novara) offer specialized services for cross-border commuters: tax calculation, 730 compilation, refund management, consultation on AVS/LPP. Many CAFs have staff who speak Italian and German/French, facilitating communication with Swiss institutions.

For more complex issues (e.g. tax arrears, tax audits, pension planning involving AVS + INPS), it is advisable to contact a cross-border tax consultant or an accounting firm specializing in cross-border workers. The investment in consultancy often pays off with greater returns or identified retirement savings.

Recurring updates and deadlines

The New Agreement introduced measures that require constant attention:

• 730 ordinary: traditionally expires at the end of May (sometimes extended to June)
• Foreign VAT payment: if you work for a Swiss company, check the application of Italian VAT on purchases/services
• KVG (Swiss health insurance): cross-border workers with a G permit have the right to remain in Switzerland; adult deductibles range from CHF 300 to CHF 2,500
• Pending AVS contributions: check your AVS account online annually (SSO e-service or cantonal office) to verify that all payments are registered
• CHF/EUR exchange rate: since the Italian calculation requires a conversion, the average annual exchange rate of the Revenue Agency is binding; make sure you always use that parameter, not the daily spot exchange rate

Concrete next steps

If you work in Switzerland and live more than 20 km from the border, the first step is to verify your category (old or new cross-border worker) by checking the date of first registration as a cross-border worker with the Swiss (SECO) and Italian (SEM) authorities. Next, gather your Swiss documents from last year and use a specialized calculator to estimate your annual net and possible rebate. Finally, rely on a CAF or consultant at least once to understand in detail how your case is moving, so as to avoid recurring errors and optimize the payment/reimbursement.

The dichiarazione dei redditi tramite 730 remains the key tool for recovering Swiss tax credits and aligning with the Italian tax regime: investing time in correct compilation is worthwhile.