Permit G and taxes: how cross-border work in Ticino works today

Permit G is the authorisation issued to people who live in Italy, work in Switzerland and return home every day. It is the document that governs cross-border work, and for some years now it has come with a new tax regime.

The agreement between Switzerland and Italy on the taxation of cross-border workers was signed on 23 December 2020 and entered into force on 17 July 2023. Its provisions have applied since 1 January 2024 and replace those of the 1974 arrangement. They concern the border cantons, namely Ticino, Graubünden and Valais.

Old and new cross-border workers

The decisive distinction is the date. Anyone who acquired cross-border worker status before 17 July 2023 falls into the category of old cross-border workers and remains taxable only in Switzerland, under the previous regime.

Anyone who started after that date is a new cross-border worker. In that case source tax is levied in the canton where the person works, but at a reduced level equal to 80 per cent of the ordinary rates. The income must then be declared in Italy and subject to Irpef at national rates, with a credit for what has already been paid in Switzerland. The overall burden therefore also depends on Italian taxation.

Workers covered by the agreement can no longer request ordinary taxation in Switzerland.

The twenty-kilometre zone

To count as a cross-border worker under the agreement, a person must live in a municipality whose territory lies within twenty kilometres of the border and return home every day. On 23 December 2023 the authorities of the two countries jointly established the list of border municipalities meeting this criterion.

The list created an intermediate category: residents of the so-called new border municipalities, places that entered the zone under the new definition. Their tax position required subsequent clarification from the administrations.

Anyone who does not fall within the agreement's definition of a cross-border worker, for instance because they live beyond twenty kilometres or do not return daily, remains subject to the general rules on source taxation and to the double taxation convention. The cantonal tax division provides a simulator for checking which category applies.