Individual Taxation

Tax aspects of cross-border commuters and working from home – update on Italy and France

Working from home has become a reality for many employees today, even across borders. It is precisely here that many tax and social security issues arise in practice. Switzerland has concluded bilateral cross-border commuter agreements with Germany, the Principality of Liechtenstein, Italy and France (but not with Austria). Most recently, on 10 November 2023, Switzerland and Italy signed a declaration on the taxation of cross-border commuters working from home. Also this year, a supplementary agreement was concluded with France on the income taxation of cross-border commuters working from home.

The following article deals with the changes to the income taxation of employees as well as the social security aspects for cross-border commuters working from home in relation to Italy and France.

On the topic of permanent establishment risk, please refer to our Tax Briefing “Home office and the risks of creating a permanent establishment” from February 2023.

The principle of the place of work

According to the place of work principle, the state in which the work is physically carried out may generally tax the income from employment. The 183-day rule as an exception to the place of work principle typically does not apply to cross-border home office constellations, as working days are performed in a country in which the employer is domiciled or has a permanent establishment.

Special taxation rules may apply to cross-border commuters, which are covered by bilateral cross-border commuter agreements.


On 17 July 2023, the agreement on the taxation of cross-border commuters and a protocol of amendment to the double taxation agreement (DTA) between Switzerland and Italy entered into force. These regulations will apply from 1 January 2024. According to the new agreement, a cross-border commuter is an employee who lives within a radius of 20 kilometres of the border of one state and is employed by an employer in the border area of the other state. The border area includes the cantons of Graubünden, Ticino and Valais as well as the regions of Lombardy, Piedmont and Valle d’Aosta and the province of Bolzano.

The agreement provides for the automatic exchange of information on employment income in order to ensure correct taxation.

In the case of “new cross-border commuters” who have taken up gainful employment after 17 July 2023, the employer state may withhold 80% of the regular withholding tax on earned income. These cross-border commuters are regularly taxed in their country of residence, which must avoid double taxation. Italy now avoids double taxation by granting a credit for the Swiss income taxes (no exemption of income taxed in Switzerland).

A transitional arrangement applies to cross-border commuters who have already worked in the aforementioned border cantons between 31 December 2018 and 17 July 2023.

In addition to the agreement on the taxation of cross-border commuters, Switzerland and Italy signed a joint declaration on 10 November 2023, which should now bring legal certainty to the home office issue. It replaces the transitional rules from the coronavirus pandemic. According to this declaration, from 1 January 2024, all cross-border commuters will be able to work up to 25% of their working hours from home without this affecting their status as cross-border commuters.

The declaration also stipulates that special rules for the taxation of cross-border commuters working from home will be agreed by the end of November 2023 for the period from 1 February 2023 to 31 December 2023.The intention is to extend the existing transitional solution between Switzerland and Italy. However, these special rules have not yet been published.


The relationship between Switzerland and France with regard to the taxation of cross-border workers is governed by a cross-border commuter agreement on the one hand and the DTA on the other hand.

The cross-border commuter agreement of 1983 applies to commuters between France and eight specific Swiss cantons (BE, SO, BS, BL, VD, VS, NE and JU). The 1966 DTA between Switzerland and France, however, applies to the whole of Switzerland and is used when the cross-border commuter agreement does not apply. A separate cross-border commuter agreement applies to Geneva, but this only concerns equalisation payments between the states. Income taxation in connection with Geneva is therefore governed by the rules of the DTA Switzerland-France.

On 27 June 2023, a supplementary agreement to the bilateral DTA was signed, which now contains permanent taxation rules for income from cross-border work performed from home. In order for the new supplementary agreement to enter into force, it still needs to be adopted by the legislature in both countries. However, the provisions of the supplementary agreement are already applicable due to a temporary mutual agreement.

The new supplementary agreement with France is more generous than the solution with Italy. It allows cross-border work from home of up to 40% of working hours per year. As long as the work from home remains within this bandwidth, the employer state’s right of taxation remains unaffected. The supplementary agreement introduces a future automatic exchange of information, which includes information on tax-relevant working days in addition to salary data.

Under current domestic law, however, the legal basis does not permit taxation of working days outside Switzerland for employees who are not resident in Switzerland. This means that Switzerland can currently only tax income from working days physically performed in Switzerland, although the agreement provides for a more extensive right of taxation.

The Federal Council therefore submitted a revision of national tax law for consultation on 9 June 2023.This provides for the income of employees who work from their place of residence abroad to be taxed in Switzerland (despite a lack of physical presence), provided that the applicable DTA assigns the right of taxation to Switzerland.

Social security aspects

After the transitional rules from the coronavirus pandemic expired on 30 June 2023, a new multilateral agreement between Switzerland and certain EU and EFTA member states has been in force since 1 July 2023.

If both countries have signed the agreement, working from home in the country of residence is possible up to a maximum of 49.9% of the total working hours, without triggering a shift in the social security affiliation from the employment country to the employee’s country of residence. This regulation is significantly more generous than the previous maximum of 24.9% of working hours.

The multilateral agreement is only applicable to persons who are covered by the Agreement on the Free Movement of Persons with the EU or the EFTA Agreement (i.e. in the relationship between Switzerland and the EU only to persons who are Swiss or EU nationals and in the relationship between Switzerland and the EFTA only to EFTA nationals).

Both Switzerland and France have signed the multilateral agreement, i.e. in relation to France, the 49.9% upper limit for working from home already applies.

Italy has not yet signed. Accordingly, in relation to Italy, work from home must be limited to a maximum of 24.9% of working hours in order to maintain social security coverage in the employer’s country.

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