What is cross-border work between Italy and Switzerland
A cross-border worker (frontaliero) is a person who resides in Italy and commutes daily (or at least weekly) to Switzerland for work, returning to their home. This arrangement involves approximately 90,000 Italian workers, concentrated mainly in the border provinces: Como, Varese, Verbano-Cusio-Ossola and, to a lesser extent, Sondrio and Bolzano.
The taxation of cross-border workers is governed by a bilateral agreement between Italy and Switzerland, profoundly reformed in 2023 with effects from 1 January 2024. The new agreement radically changes the taxation system, moving from an exclusive regime in Switzerland to a concurrent taxation regime between both countries.
This guide analyses in detail the new regulatory framework, obligations for workers and employers, the fiscal rebate mechanism to Italian municipalities, and the differences from the old 1974 agreement.
The new tax agreement (from 2024)
On 23 December 2020, Italy and Switzerland signed a new agreement on the taxation of cross-border workers, ratified by Italy with Law 83/2023 and entered into force on 17 July 2023 with tax effects from 1 January 2024.
The new agreement progressively replaces the 1974 one and introduces the principle of concurrent taxation: Switzerland withholds a source tax of up to 80% of the normally applicable tax, while Italy has the right to tax the same income, granting a tax credit to avoid double taxation.
Definition of cross-border worker in the new agreement
A 'new cross-border worker' is someone who resides in a municipality whose territory lies, at least in part, within 20 km of the Swiss border and works for an employer in a Swiss municipality within the same zone. The worker must return daily to their home in Italy.
Old vs. new regime: what changes
The transition from the old to the new agreement represents a structural change in cross-border worker taxation. Here are the main differences:
Pre-2024 regime (1974 Agreement)
- —Exclusive taxation in Switzerland through withholding tax
- —No filing obligation in Italy on Swiss employment income
- —Fiscal rebate to Italian municipalities equal to 38.8% of withholding tax
- —Applicable to all cross-border workers without time distinctions
New regime from 2024
- Concurrent taxation: both Switzerland and Italy tax the income
- Switzerland withholds up to 80% of the ordinary withholding tax
- Italy taxes the income with a tax credit for Swiss tax paid
- Mandatory tax return in Italy (modello 730 or Redditi PF)
- Fiscal rebate progressively reduced and set to end
Transitional regime: cross-border workers who were already employed in Switzerland on 31 December 2023 ('old cross-border workers') continue to apply the old regime until 2033, provided they maintain continuous employment in the border zone.
How concurrent taxation works
The new agreement provides a precise mechanism for sharing tax revenue between the two countries:
Withholding tax in Switzerland
The Swiss employer withholds source tax from the cross-border worker's salary. The maximum withholding rate is 80% of the tax normally applicable under cantonal law (cross-border tariff). The remaining 20% represents Italy's reserved share.
Tax return in Italy
The cross-border worker must declare Swiss employment income in their Italian tax return (730 or Redditi PF model). The income is converted to euros at the average annual exchange rate published by the Agenzia delle Entrate.
Tax credit
To avoid double taxation, Italy grants a tax credit equal to the taxes definitively paid in Switzerland. The credit cannot exceed the portion of Italian tax attributable to the foreign income.
CHF 10,000 exemption (abolished)
The CHF 10,000 exemption threshold provided by the old double taxation convention no longer applies to new cross-border workers from 2024. Income is fully taxable.
Social security contributions
AHV/IV/EO and ALV contributions paid in Switzerland are not subject to double taxation. The cross-border worker is subject to the Swiss social security system for pillars 1 and 2 and may contribute to pillar 3a if they have AHV income.
Obligations for the Swiss employer
The Swiss employer has specific responsibilities in the fiscal management of cross-border workers:
Withholding tax deduction
The employer must calculate and withhold monthly source tax from the cross-border worker's salary according to the applicable cantonal tariff, up to a maximum of 80%.
Annual certificate issuance
By the end of February of the following year, the employer must issue the salary certificate (Lohnausweis) and the withholding tax attestation to the cross-border worker, needed for the Italian tax return.
Reporting to cantonal tax authorities
The employer reports to the cantonal tax administration the data of employed cross-border workers, including Italian domicile and amounts withheld.
Domicile verification
The employer must verify that the worker actually resides within 20 km of the border and returns daily to their Italian domicile. If these requirements are not met, the ordinary withholding tax tariff (100%) applies.
Filing obligations in Italy
From 2024, new cross-border workers also have tax obligations in Italy:
Mandatory tax return
Employment income earned in Switzerland must be declared in the 730 form or Redditi PF model, in section RC (employment income) and section CR (tax credit for foreign income).
Conversion to euros
Income and taxes paid in Swiss francs must be converted to euros at the average annual exchange rate set by the Agenzia delle Entrate (annual decree).
RW section — Tax monitoring
If the cross-border worker holds bank accounts or deposits in Switzerland (including the salary account), the RW section of the tax return must be completed for fiscal monitoring (IVAFE due if average value exceeds €5,000).
Deadlines
Model 730: by 30 September of the following year. Redditi PF model: by 30 November. Tax payments (balance + advances) follow ordinary IRPEF deadlines (30 June and 30 November).
Regional and municipal surcharges
Swiss employment income is also subject to Italian IRPEF regional and municipal surcharges, calculated on the taxpayer's total income.
Fiscal rebate to Italian municipalities
The fiscal rebate (ristorno) is a historical mechanism provided by the 1974 agreement: Switzerland returns a portion of the withheld source tax to the Italian municipalities where cross-border workers reside. This compensation recognises that cross-border workers use Italian public services while paying taxes in Switzerland.
Under the new agreement, the rebate is progressively reduced for 'new cross-border workers' and maintained for 'old cross-border workers' until 2033:
| Period | Rebate share | Applicability |
|---|---|---|
| Until 2023 | 38.8% of withholding tax | All cross-border workers (old agreement) |
| 2024–2033 | 40% of withholding tax | Old cross-border workers only (transitional regime) |
| From 2034 | No rebate | The mechanism ceases completely |
For 'new cross-border workers' (first employed from 2024 onwards), no rebate is provided: compensation occurs through the concurrent taxation mechanism, which allows Italy to directly tax the income.
Double taxation: how to avoid it
The risk of double taxation is the central issue for cross-border workers. The new agreement addresses it with the tax credit mechanism: taxes paid in Switzerland (up to 80% of withholding tax) are deductible from the Italian IRPEF due on the same income.
In practice, the cross-border worker calculates the gross Italian IRPEF on Swiss income converted to euros, then subtracts the Swiss taxes definitively paid. If the Swiss tax exceeds the Italian IRPEF (common in high-tax cantons), the unused tax credit is not refundable but can be carried forward for 4 years.
For old cross-border workers under the transitional regime, there is no risk of double taxation since Swiss employment income is not taxed in Italy (full exemption) until 2033.
Warning: if the cross-border worker also receives Italian income (property, investments, occasional work), this is added to Swiss income to determine the applicable marginal IRPEF rate. This can result in a higher tax bracket and greater overall tax burden.
Practical cases
Here are some typical scenarios to understand the impact of the new agreement:
New cross-border worker — Canton Ticino
Old cross-border worker — Transitional regime
Cross-border worker with Italian property
Cross-border worker beyond 20 km
Practical tips for cross-border workers
- Keep every monthly payslip and withholding tax certificate: these will be needed for the Italian tax return and to calculate the tax credit
- Check your status: if you started working in Switzerland before 2024, you may fall under the transitional regime for 'old cross-border workers' with exemption in Italy until 2033
- Declare Swiss accounts in the RW section: even a simple salary account must be reported for fiscal monitoring (IVAFE). Failure to report can result in penalties of 3% to 15% of undeclared amounts
- Consult a tax adviser specialised in cross-border matters: coordinated Italy–Switzerland management requires specific expertise in both systems
- Plan your pillar 3a contributions: as a cross-border worker with AHV income, you are entitled to deduct 3a contributions in Switzerland, reducing your withholding tax
- Monitor the CHF/EUR exchange rate: the conversion at the average annual rate can significantly affect the Italian IRPEF due
- If you are an 'old cross-border worker', plan the transition to the new regime in 2034 well in advance: the switch will increase the overall tax burden
- Use AccountEX to track income and taxes in Swiss francs throughout the year: when filing your Italian return, you'll have all data ready and converted
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