2026 Tax Credit for Border Workers: Limits & Checklist (cross-border guide)

Context

In brief

• New Cross‑border Agreement signed 23/12/2020, in force from 1/1/2024.
• Tax credit 2026 avoiding double taxation, valid for residents within 20 km.
• Exemption €7,500 for old cross‑border workers, €10,000 for new cross‑border workers.

Key facts

• What: tax credit on employment income for cross‑border workers.
• When: fiscal year 2026, regime in force from 1/1/2024.
• Where: Switzerland (withholding tax) and Italy (730 declaration).
• Who: cross‑border workers residing within 20 km of the border.
• Amount: exemption €7,500 (old) / €10,000 (new).

On 23 December 2020 the new Cross‑border Agreement was signed, ratified in Italy by Law 83 of 13 June 2023 and operational from 1 January 2024. This agreement confirmed that the withholding tax on employment income is collected only in Switzerland, excluding any simultaneous levy in Italy. To avoid double taxation, the Italian system provides, in the CE section of the 730 form, a tax credit for the tax already paid in Switzerland.

Two exemption regimes exist for cross‑border workers: those who were already cross‑border workers before 17 July 2023 keep an exemption of €7,500, with a transitional regime extending from 2024 to 2033; new cross‑border workers enjoy a higher exemption of €10,000. The Italy‑Switzerland Double Taxation Convention, signed 9 December 1976, remains the basic legal reference, noting that Switzerland is not an EU/EEA member.

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Operational details

Impact on net income

The main advantage of the tax credit is the reduction of the Italian tax pressure. For a cross‑border worker with an annual gross income of €45 000, the Swiss withholding (for example 5 % AVS/AHV plus AD/AC contributions) is deducted from the IRPEF calculation. Without the credit, IRPEF would be calculated at 35 % on the portion exceeding €28 000, generating a tax of about €5 950. With the credit, the amount already paid in Switzerland (about €1 800, considering AVS/AHV, AD/AC and LPP) is subtracted, reducing IRPEF to about €4 150. The net result is a saving of about €1 800.

Comparison between old and new cross‑border workers

| Type of cross‑border worker | Tax‑free allowance | Transitional regime | Swiss rates (example) | |-----------------------------|--------------------|---------------------|-----------------------| | Old (before 17 July 2023) | €7,500 | 2024‑2033 | AVS/AHV 5.3 % + AD/AC 1.1 % (cap CHF 148,200) | | New (from 17 July 2023) | €10,000 | – | Same rates, but higher allowance |

The above chart shows how the higher allowance for new cross‑border workers further reduces the Italian taxable base. Moreover, Swiss legislation provides variable LPP contributions (7‑18 % depending on age) and LAINF between 0.7 % and 1.5 %, which affect the calculation of the withholding at source.

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Key points

Operational checklist for 2026 1. Verification of residence: make sure you live within 20 km of the border, by consulting the residence certificate issued by the Italian municipality. 2. Collection of documents: prepare the Swiss paycheck, withholding tax certificate (Remittance of payment), form 730 and, if necessary, the LAMal/KVG documentation. 3. Calculation of Swiss withholding tax: use our calcolatore stipendio to enter gross income, AVS/AHV rates (5.3%), AD/AC (1.1%) and, if applicable, LPP. The result indicates the amount withheld in Switzerland. 4. Completion of the tax credit framework: in the Italian declaration, it indicates the amount withheld in Switzerland in the field provided for by the EC framework of 730. Remember to enter the correct deductible (€7,500 or €10,000) depending on your date of entry into the Swiss market. 5. Submission of the declaration: submit form 730 within the Italian tax deadlines (typically at the end of September, with any extensions). The Revenue Agency will verify the credit and, if everything is correct, credit the amount in your favor. ### Useful tools - calcolatore stipendio to simulate the net effect of credit. - cost-of-living to compare the cost of living between your Italian municipality and major Swiss cities. - pension to check how AVS/AHV contributions affect future income. 💡 By following this procedure, the border carrier will be able to optimise its load