The second LPP pillar: when Italy and Switzerland can be withdrawn and taxed (cross-border guide)

Context

In a nutshell

• The second LPP pillar has been active since 1 January 2024.
• The allowance for frontier workers is CHF 10,000.
• The transitional regime lasts until 2033.

Key facts

• What: The second LPP pillar is a new form of occupational pension.
• When: The new border agreement was signed on 23 December 2020.
• Where: Switzerland and Italy.
• Who: The frontiersmen.
• Amount: CHF 10,000

The second LPP pillar: when Italy and Switzerland can be withdrawn and taxed

The second pillar LPP is a new form of occupational pension that comes into force from 1 January 2024. This border agreement was signed on 23 December 2020 between Switzerland and Italy and concerns border workers. The allowance for frontier workers is CHF 10,000 and the transitional regime will last until 2033.

To understand how the second LPP pillar works and how it can be withdrawn without suffering double taxation, it is important to know some key concepts.

The second LPP pillar is a form of occupational pension that allows frontier workers to accumulate contribution shares and withdraw them in the event of inactivity or retirement. However, it is important to note that the withdrawal of these allowances may be subject to taxation in both countries, Switzerland and Italy.

To avoid double taxation, the exemption regime provided for by the second LPP pillar can be used. This regime allows border crossers to exempt themselves from

Operational details

The second LPP pillar: when Italy and Switzerland can be withdrawn and taxed

On 1 January 2024, the new border agreement between Italy and Switzerland enters into force, introducing a deductible of CHF 10,000 and a transitional regime until 2033. This means that border crossers will be able to enjoy greater flexibility in withdrawing and depositing money, without suffering double taxation.

However, it is important to understand the rules and exceptions that govern this new regime. In this article, we will explore the possibilities of withdrawing and depositing money, as well as the consequences of double taxation in Italy and Switzerland.

The excess of CHF 10,000

The deductible of CHF 10,000 is a limit beyond which frontier workers are required to declare money withdrawn or deposited in Switzerland. This means that, up to this amount, no special declaration or authorisation is required.

However, it is important to note that the deductible does not apply to money deposits made with Swiss banks or financial institutions. In these cases, frontier workers are required to declare the money deposited, regardless of the amount.

The transitional regime until 2033

The transitional regime is a transitional period that will last until 2033. During this period, border crossers will be able to enjoy greater flexibility in the operations of withdrawing and depositing money.

However, it is important to note that the regime

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

The second LPP pillar: when Italy and Switzerland can be withdrawn and taxed

To withdraw the second LPP pillar, frontier workers must reside in Switzerland and have a working income. The deductible of CHF 10,000 applies only in Switzerland and not in Italy. The transitional regime lasts until 2033, after which the deductible will expire.

Border workers working in Switzerland and residing in Italy can withdraw the second LPP pillar, but it is important to note that the excess of CHF 10,000 is not applied in Italy. This means that frontier workers could be subject to taxation in Italy on the part of their income that exceeds the deductible.

Concrete example: an Italian worker who resides in Switzerland and earns CHF 80,000 per year. The deductible of CHF 10,000 is only applied in Switzerland, so the worker may be subject to tax in Italy on the part of his income that exceeds CHF10,000. In this case, the taxation in Italy would be applied only on the part of the income that exceeds CHF10,000, or CHF 70,000 (80,000 - 10,000).

The transitional regime of the second LPP pillar is applicable until 2033, after which the deductible will expire. This means that frontier workers working in Switzerland and residing in Italy could be subject to taxation in Italy on the part of their income that exceeds the deductible as of 2034.

Switzerland is divided into 26 cantons, each with its own rules and regulations.

Check tax deadlines for cross-border workers: returns, Swiss declarations, rebates — all dates in one interactive calendar.