Frontalieri, the tax battle between Italy and Ticino (cross-border guide)

Context

In a nutshell

• The new agreement between Italy and Switzerland has opened up new opportunities for frontier workers.
• Italian and Ticino tax authorities are in an underground battle for border guards.

Key facts

• What: New agreement between Italy and Switzerland.
• When: Effective January 1, 2024.
• Where: Applies to all frontiersmen.
• Who: Italian and Ticino tax authorities.
• Amount: Not applicable.

The new agreement between Italy and Switzerland

The agreement between Italy and Switzerland was signed in 2022 and provides for a series of changes to tax regulations affecting frontier workers. Among the main innovations, the possibility of deducting travel and subsistence expenses in Switzerland, as well as the reduction of the tax burden for frontier workers residing in Switzerland. These innovations represent a real revolution for frontier workers residing in Switzerland, particularly in cities such as Lugano and Bellinzona.

The tax battle between Italy and Ticino

The tax battle between Italy and Ticino is a complex and intricate issue, involving both tax authorities. Italy, in fact, requires frontier workers to pay income taxes in Italy, while Ticino requires frontier workers to pay income taxes in Switzerland. The new agreement between Italy and Switzerland has opened up new opportunities for frontier workers, but also new challenges for

Operational details

Italy and Switzerland are in an undercover battle for frontiersmen. The new agreement between the two countries has opened up new opportunities for workers moving between Italy and Switzerland. The Italian and Ticino tax authorities are trying to understand how to manage the new rules and new opportunities.

The agreement between Italy and Switzerland, signed on 21 December 2018, provides for a series of rules for the management of the work performance of border workers. Among the new rules, the possibility of obtaining a work allowance in Switzerland, which can be used to cover travel and living costs. Switzerland also provides a series of incentives for frontier workers, such as the work allowance, which can vary from 2,500 to 4,000 Swiss francs per month, depending on the type of work and the duration of the contract.

But how does all this work in practice? For example, a frontier worker living in Lugano and working in Milan will be able to obtain a work allowance in Switzerland, which can be used to cover travel and subsistence costs. In this way, the frontier worker will be able to enjoy greater flexibility and will be able to choose to work in Switzerland without having to give up their home and family in Italy.

However, the agreement between Italy and Switzerland is not without criticism. Some experts have questioned the possibility of obtaining a work allowance in

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

If you are a frontier worker, it is important that you know what the new convention means to you. The agreement between Italy and Switzerland was amended in 2019 and has had a significant impact on your pockets.

You can check out our salary calculator to see how the new rules will affect you. Enter your details and find out how Ticino taxes and expenses will be transformed after the agreement comes into force. 💡

Plus, you can learn how to manage your taxes and expenses with our financial planning tool. Our team of experts will guide you through the tax rules of Ticino and Italy to make sure you don't lose money unnecessarily.

The convention introduced a new taxation system for frontier workers. As of January 1, 2020, employees who work in Switzerland and reside in Italy are subject to higher taxation. This means you may have to pay more tax on your salary.

Here is a concrete example:

• If you work in Lugano and earn CHF 5,000 per month, your tax rate in Switzerland would be 14.2%. However, the agreement will also oblige you to pay Italian taxes, which amount to 25%. This means that your total taxation would be 39.2%.

Alternatively, you could opt for the single taxation in Switzerland, which amounts to 7.8%. However, this could result in a loss of benefits in Italy.

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