Cross-border workers, salary data exchange from 2027

Context

TL;DR

• From January 1, 2027, the new LSADS enters into force
• Federal Council decision: August 19, 2026
• Switzerland-Italy Agreement applicable from January 1, 2024
• Old cross-border workers remain under the transitional regime

Key facts

• Law → LSADS
• Entry into force → January 1, 2027
• Agreement → July 17, 2023; applicable from January 1, 2024
• Exchange → salary information between tax authorities
• Compensation → 40% of tax revenue until 2033

The legislation provides the basis for making operational, within the tax framework for cross-border workers between Italy and Switzerland, the exchange of salary data provided for by the agreements.

In Switzerland, the legislation provides the necessary basis for managing the automatic exchange provided for by the agreements concluded with Italy and France. Matters regulated include the transfer of information between the cantonal tax authorities and the Federal Tax Administration. For those who work in Switzerland and fall under the cross-border arrangement with Italy, the operational element is therefore the transfer of salary information between the competent authorities. The process concerns the institutional exchange channel, from the cantonal authorities to the federal administration, within the framework of the agreements already concluded.

From the decision to implementation

The agreement already provides for the automatic and reciprocal transmission of the information necessary for the country of residence to tax the worker correctly.

The Federal Council set January 1, 2027, as the effective date of LSADS, which defines the Swiss legal and operational framework necessary to implement the exchange. The timeline is the central point: the agreement established the mechanism, while the federal law organizes its management on the Swiss side.

The distinction between old and new cross-border workers is part of the new tax system that has already entered into force. The decision taken in August 2026 therefore concerns the implementation of the data exchange, with an effect expected from January 1, 2027.

Operational details

Transitional regime: who is considered an old cross-border worker

To assess the concrete impact in Ticino, it is first necessary to identify the so-called old cross-border workers. Generally, this includes those who, on July 17, 2023, met the requirements to be considered tax cross-border workers and worked in the Cantons of Ticino, Graubünden or Valais. The category also includes anyone who had worked as a cross-border worker between December 31, 2018 and July 17, 2023.

The dates that distinguish the positions

These temporal references mark the distinction between old and new cross-border workers created by the new tax system. For the old cross-border workers indicated above, the transitional regime applies: the remuneration concerned continues to be taxed at source exclusively in Switzerland. The LSADS is therefore not presented as a new tax regime, but as the Swiss legal and operational basis for implementing the exchange already provided for.

| Profile | Indicated element | | Old cross-border worker | Conditions for being a tax cross-border worker and working in the Cantons of Ticino, Graubünden or Valais on July 17, 2023, or activity between December 31, 2018 and July 17, 2023 | | Transitional regime | Taxation at source exclusively in Switzerland on the remuneration concerned | | Compensation | Payment to Italy, by the cantons concerned, of 40% of tax revenue until tax year 2033 |

The useful comparison, for those who work in Ticino, is therefore between the personal category and the administrative mechanism. The former concerns membership in the transitional regime; the latter concerns the automatic exchange of information between authorities. The federal law organizes this transition, while the Agreement links the information to the possibility for the state of residence to tax the worker correctly.

The two levels can coexist when interpreting the tax position: on the one hand, taxation at source exclusively in Switzerland remains in place for remuneration covered by the old cross-border workers' regime; on the other, there is an automatic and reciprocal exchange of information. To explore the salary item concerned in greater depth, one can consult busta paga svizzera and consider the tax issue alongside dichiarazione delle imposte.

Useful tools to protect your net income

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

Key points

The operational check before January 1, 2027

The LSADS has a precise entry-into-force date, but assessing one’s situation begins with a historical review. Anyone wishing to understand how to interpret this change can follow four steps, all based on the criteria indicated for former frontier workers.

Four steps

• Reconstruct the situation as of July 17, 2023: verify whether the conditions for being a tax frontier worker were met and whether the work was carried out in the Cantons of Ticino, Grisons, or Valais.
• Check the preceding period: verify whether one had worked as a frontier worker between December 31, 2018, and July 17, 2023.
• Separate the agreement from the law: distinguish the Switzerland-Italy Agreement, which entered into force on July 17, 2023, and applies from January 1, 2024, from the LSADS, which enters into force on January 1, 2027.
• Identify the effect described: for former frontier workers, the relevant remuneration remains taxed at source exclusively in Switzerland; for the Cantons concerned, compensation to Italy equal to 40% of tax revenue is provided for through the 2033 tax year.

This sequence avoids conflating three different aspects: the date of the Agreement, the date of application of the Agreement, and the date on which the federal law enters into force. It also helps distinguish the worker from the authorities involved. The first element is the frontier-worker category; the second is the transfer of information between cantonal tax authorities and the Federal Tax Administration.

The law concerns the Swiss legal and operational framework for the automatic exchange of salary data provided for by the agreements with Italy and France. The Agreement with Italy, by contrast, links the information to the possibility for the state of residence to tax the worker correctly. The individual check must remain within these elements, without turning the LSADS into a new tax rule.

The check can be completed by keeping separate the treatment of the relevant remuneration and the compensation paid by the Cantons to Italy. They are two different reference points of the same system: the first concerns the worker under the transitional regime, while the second concerns the Cantons concerned. To measure the relationship between remuneration and taxes, use calcolatore stipendio.

Source: tio.ch