The Italian government has officially approved new tax measures that will impact cross-border workers commuting to Switzerland, particularly those engaged in teleworking. Starting January 2024, Italian residents working for Swiss employers will be taxed on remote working hours, ending a previous exemption that allowed them to work from home tax-free.
The new regulation is part of a broader update to the tax framework governing cross-border employment and seeks to close what Italian authorities see as a tax loophole. Under the revised rules, Italian citizens employed in Switzerland must pay Italian income tax for any telecommuting done from their homes in Italy, even if their primary employer is based across the border.
Previously, these workers benefitted from an arrangement where income earned while teleworking was not subject to Italian tax, provided their employment was in Switzerland. However, concerns over growing telecommuting trends and lost tax revenue led Rome to revise the agreement, in coordination with Swiss authorities.
The agreement was signed between the two countries in 2020 and ratified by the Italian Parliament in 2023, but its implementation had been delayed to allow time for administrative adjustments and public awareness. From January 1, 2024, the new taxation regime applies without exception.
The change will primarily affect more than 70,000 Italian cross-border workers in regions such as Lombardy and Piedmont who commute daily or periodically to Switzerland, particularly to the cantons of Ticino and Grisons. The financial implications are significant: teleworking days will now be taxed in Italy rather than Switzerland, where tax rates are typically lower.
According to the Swiss Federal Tax Administration, the reform was designed to respect both nations’ fiscal sovereignty while adapting to the post-pandemic rise in remote work. Switzerland has expressed concern over the potential administrative burden for employers and employees but acknowledged that the bilateral solution was necessary.
Swiss employers have voiced apprehension about the move. Business associations warn that the added complexity might reduce the attractiveness of cross-border employment and complicate payroll management. Some companies may revise telework policies or reduce job offers to Italian residents to avoid compliance difficulties.
Italian unions, meanwhile, have criticized the government for not negotiating greater tax leniency, arguing that workers will effectively be double-penalized—once through higher taxes and again through reduced remote work flexibility. “This risks pushing skilled workers away from cross-border employment and hurting local economies on both sides,” one union official said.
The Swiss government has pledged to monitor the implementation of the agreement closely and has asked for a joint review mechanism to assess its economic impact. In the meantime, cross-border workers are being encouraged to consult tax advisors and update employment contracts to reflect the new regulations.
As both countries navigate the economic and political implications of this tax shift, the issue underscores the broader challenge of adapting tax frameworks to new models of work in a post-pandemic era—especially in regions where international borders intersect with daily professional life.
Source: SWI swissinfo.ch
