How to protect your salary from exchange

Context

In short

• New Cross-border Agreement in force from 1 January 2024: modified tax regime
• IRPEF rates 2026: 23% up to €28,000, 33% up to €50,000, 43% above
• Withholding tax ONLY in Switzerland; tax credit in Italy
• Timing of the EUR-CHF exchange rate is critical for the real net of single cross-border workers

Key facts

• What: New cross-border agreement between Switzerland and Italy
• When: Effective January 1, 2024 (signed December 23, 2020)
• Where: Ticino-Italy cross-border workers (Brogeda, Gaggiolo, Ponte Tresa, Chiasso passes)
• Who: SECO (Switzerland), INPS and Revenue Agency (Italy)
• Regimes: Old cross-border commuters exemption €7,500 (transit 2024–2033); new €10,000
• Rates: Italian IRPEF 23%, 33%, 43% by bands; AVS/AI Switzerland 5.3%
• Tax: Withheld ONLY in Switzerland; double taxation avoided with tax credit (EC framework of 730)

Starting from 1 January 2024, the New Cross-border Agreement between Switzerland and Italy has significantly changed the tax and contribution regime of those who work in Swiss territory and reside in Italy. For the single cross-border worker, this transition has concrete implications on the management of the CHF-EUR exchange rate: the real net varies not only with the volatility of the currency pair, but also with the tax declaration deadlines and the timing of conversion of the salary into euros.

The withholding tax remains withheld exclusively in Switzerland (AVS/AI 5.3%, AD/AC 1.1%, LAINF 0.7–1.5%, LPP 7–18% depending on the age group). In Italy, the IRPEF applied is the ordinary one: 23% up to €28,000, 33% between €28,001 and €50,000, 43% over €50,000. The double payment does not occur because the Italian system recognizes a tax credit (EC framework of 730) which compensates for the Swiss withholding. Consequently, the single cross-border worker must plan when to convert the CHF into EUR based on the prevailing exchange rate, aware that the Italian tax authorities will reference a specific rate for the calculation of the tax base.

For cross-border workers who were already cross-border workers before 17 July 2023, a transitional regime has been envisaged: exemption of up to €7,500 per year, with gradual adjustment until 2033. For new cross-border workers, the exemption is €10,000.

Withholding tax and currency conversion

The single cross-border worker receives his salary in CHF in his Swiss bank account and has discretion in converting to EUR. The withholding of AVS/AI (5.3%) and other contributions (AD/AC 1.1%, LAINF 0.7–1.5%) takes place directly from the paycheck in Switzerland, not in Italy. This means that the taxable amount declared to the Italian tax authorities is already gross of these Swiss withholdings. Subsequently, in Italy, the tax credit (EC framework of 730) subtracts the taxes paid in Switzerland from the tax base, avoiding penalties. The timing of the exchange rate - i.e. the moment in which to convert CHF to EUR - affects the real purchasing power in Italy, not on taxation per se, but on how much euro the cross-border worker actually receives for daily expenses.

Operational details

EUR-CHF volatility: the silent impact on the net

The Convention between Italy and Switzerland, signed on 9 March 1976, establishes that the main tax burden remains with the country where the income is produced (Switzerland for our cross-border workers). However, the Italian tax credit mechanism presupposes that the cross-border worker declares his income in EUR, applying a reference exchange rate. If the cross-border worker changes his CHF into EUR at a worse rate (e.g. 1.00 CHF = 0.95 EUR) than the declaration rate (e.g. 1.00 CHF = 1.05 EUR), he loses the difference, even if the tax remains formally correct.

Let's consider a hypothetical scenario: a single cross-border worker earns 80,000 CHF gross per year in Switzerland, to which AVS/AI (5.3%), AD/AC (1.1%), LAINF (0.7%) and LPP (7–18% depending on age, let's assume 10%) apply. The total Swiss withholding tax is approximately 24.1%, leaving a net of ~CHF60,720. If the cross-border worker converts at the rate of 1.00 CHF = 0.95 EUR, he receives ~57,684 EUR. However, if the average reporting rate for IRPEF is 1.00 CHF = 1.02 EUR, the Italian tax authorities tax it on 81,600 EUR (80,000 * 1.02), not on 57,684. This creates a discrepancy that the single cross-border worker must manage when filling out the 730, because the Revenue Agency compares the theoretical IRPEF (out of EUR 81,600) with the Swiss taxes paid (already counted in CHF converted at the declaration rate), and if the result is negative, it issues a refund.

Timing and exchange strategy

For the single cross-border worker who has discretion over the conversion timing, there are three approaches:

• Passive strategy: convert monthly at a fixed rate (reduces the concentrated risk of a bad rate, moving average of the exchange rate)
• Active strategy: monitor historical EUR-CHF volatility bands (usually 0.92–1.08) and convert when the pair is favorable
• Institutional instruments: Swiss banks (PostFinance, Raiffeisen, UBS) offer cross-border accounts with competitive rates compared to online money transfers

KVG, the Swiss health insurance (adult deductible CHF 300–2,500), remains paid in CHF. For the single cross-border worker, this is an additional consideration: part of the Swiss net must remain in francs to cover this mandatory expense, limiting the amount available for conversion and transfer to Italy. The conversion window therefore begins after having set aside the amount for KVG and other expenses in Swiss territory.

Key points

Practical checklist for single cross-border commuters in 2026

Step 1: Check your border status

• Are you an 'old cross-border worker' (already one before 17 July 2023)? Benefit from the €7,500 exemption until 2033.
• Are you a 'new cross-border worker'? The deductible is €10,000.
• Verify that you have the G Permit at the SEM (Secretariat of State for Migration).

Step 2: Collect the documents for the 730

• Swiss bank statements (gross CHF, details of AVS/AI/AD/AC/LAINF/LPP withholdings).
• Swiss employer's certificate (income summary document).
• Print certificate of withholding tax paid in Switzerland (to be requested from AFC/ESTV, Cantonal Federal Tax Administration).

Step 3: Determine the declarative exchange rate The exchange rate for IRPEF is established by the Revenue Agency and published monthly. It does not coincide with the bank rate on the day of your conversion. Calculate your income in EUR using the Agency rate, valid in the month in which you received the income. Consult the Revenue Agency website > foreign section > exchange rates.

Step 4: Fill in the 730 CE form In the CE framework (foreign income), declare the gross income in EUR (converted at the Agency rate), the taxes paid in Switzerland, and request the tax credit. The Agency will compare the IRPEF you should pay in Italy with the Swiss taxes paid; will return the difference (if in your favor) to you by refund by November–December 2026.

Step 5: Manage currency exchange strategically

• Open a current account with a Swiss bank (PostFinance, Raiffeisen) that offers competitive rates for cross-border commuters.
• Program monthly conversions or according to volatility: do not convert everything at once to avoid concentrated negative rate risk.
• Monitor online exchange platforms (Wise, OFX) and compare with traditional banks before each transaction.

Step 6: Deadlines 2026

• Declare to the SEM any change in situation (new employer, move, termination of employment).
• Submit the 730 by 30 September 2026 (ordinary deadline) through your CAF or accountant.
• If you are entitled to refunds, these are generally credited between November and December 2026 by the Revenue Agency.

Tools and resources to learn more

Use Frontaliere Ticino's calcolatore di stipendio frontaliere to simulate your monthly net in different exchange rate scenarios. Also consult the guide on dichiarazione dei redditi frontalieri and comparatore di banche frontaliere to identify the account with the best conditions for exchange and liquidity management in two currencies.

Contact SECO for clarifications on the G Permit and AFC/ESTV for details on Swiss contribution rates. In Italy, the Revenue Agency provides assistance services on completing the 730 for cross-border workers; the declarative exchange rate is published monthly on the official website. To monitor EUR-CHF volatility in real time, consult financial sites such as XE.com, OANDA, or Bloomberg that offer charts and histories of the currency pair.