Border workers in Ticino: analysis of the decline and local impact (cross-border guide)

Context

In a nutshell

• There is a decline in the number of active border crossers in Ticino.
• Some Swiss municipalities have a high dependence on the foreign workforce.
• The new Borderers Agreement is in force from 1 January 2024.
• Taxation takes place exclusively in Switzerland with a tax credit.

Key facts

• What: Employment dynamics of border workers in Ticino
• When: Current post-2024 measurements
• Where: Canton of Ticino, Italian Switzerland
• Who: Frontier workers and local companies
• Regulations: New Frontier Agreement (in force from 1/1/2024)
• Taxation: Withholding tax in Switzerland

The labour market landscape in Ticino is going through a phase of change, characterised by a variation in the flows of frontier workers. Despite a general downward trend, the economic structure of several Ticino municipalities remains strongly linked to the workforce from Italy. This dynamic is part of a context regulated by the new Agreement on frontier workers, signed on 23 December 2020 and fully operational from 1 January 2024, following the Italian ratification with Law 83 of 13 June 2023.

The current regulatory framework

The current tax regime stipulates that labour income tax is to be withheld exclusively in Switzerland. To avoid double taxation, workers can benefit from the tax credit in Italy, an operation that is completed

Operational details

Practical Implications for the Labor Market

The observed decline in the number of frontier workers should not be misleading about the persistent need for specialized skills in certain sectors of Ticino. In many border municipalities, the proportion of employees who cross the border daily remains above 50%. This geographical concentration suggests that local companies, especially in the industry, trade, and services sectors, are structurally dependent on the input of professionals residing in neighboring territories. The fluctuation in numbers often reflects broader macroeconomic changes, including exchange rates and local salary policies, closely monitored by competent authorities such as SECO.

Tax Scenarios

Compared to the past, the new tax regime has introduced greater clarity for the worker. The withholding tax system ensures that the tax burden is managed directly by the Swiss employer. For workers, this means that federal direct tax and cantonal taxes are already deducted from the gross salary. However, it is essential to consider the mandatory social contributions that affect the take-home pay:

| Contribution | Indicative Rate | | :--- | :--- | | AVS/AI/IPG | 5.3% (employee) | | AD/AC | 1.1% (up to threshold) | | LAINF | 0.7–1.5% | | LPP | 7–18% (age >25) |

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Key points

Operational Guide for the Worker

For those who intend to evaluate a professional opportunity in Switzerland, it is necessary to follow a well-defined procedure. The first step is the verification of contractual compliance with the laws in force. The Swiss employer is required to provide a transparent pay slip, including the mandatory deductions AVS/AI, AD, and LPP. It is advisable to regularly consult official guides to understand how your fiscal position, based on the New Agreement, affects the income tax declaration in Italy through the tax credit.

Procedures and Deadlines

The worker must pay attention to the correct management of the fiscal domicile and communication with the Italian Revenue Agency. In case of doubts on taxation or social security, it is advisable to consult the official portals of the Federal Administration of Contributions (AFC/ESTV) for the applicable rates. The documentation related to social contributions (AVS, LPP) must be carefully kept, as it is necessary for any future requests for pension benefits.

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