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With the Response to the Ruling Request No. 126 of 2026, the Italian Revenue Agency returned to the clarifications concerning the scope of application of the new tax regime for cross-border workers, as defined by the Agreement between the Italian Republic and the Swiss Confederation of 23 December 2020.
This document forms part of the gradual interpretation process of this new regulatory framework, which has significantly changed the tax treatment of employment income earned by cross-border workers, broadening its subjective scope and redefining the taxation methods between the two States.
The Tax Regime for Cross-Border Workers
The tax regime for cross-border workers is now governed by the Agreement between the Italian Republic and the Swiss Confederation of 23 December 2020 (in Italian), ratified by Law No. 83 of 13 June 2023 (in Italian) and applicable as of 1 January 2024 under Article 8.
Pursuant to Article 3 of the Agreement, employment income earned by cross-border workers is taxable in the State where the professional activity is carried out, through withholding at source of up to 80% of the tax due under domestic law, including local additional taxes.
The State of residence, however, retains the right to tax the worldwide income, with double taxation being eliminated in accordance with the Italy–Switzerland tax treaty.
For the purposes of applying this regime, Article 2, letter b) defines a cross-border worker as a person residing in a municipality located within 20 km of the border, who carries out an activity in the border area of the other State and returns, in principle, daily to their home. For Italy, the border area includes Lombardy, Piedmont, Valle d’Aosta and the Autonomous Province of Bolzano.
Differences Compared with the Previous Regime
The 1974 Agreement, by contrast, provided for exclusive taxation in the worker’s State of residence, without taxation in the State where the activity was carried out.
The new regime therefore introduces concurrent taxation between the two States, broadening the subjective scope and recognising a share of taxation rights to the source State.
The Case Submitted to the Italian Revenue Agency
In the case covered by the ruling request, the taxpayer is tax resident in Switzerland, in a border municipality in the Canton of Ticino, and works as a pharmaceutical representative for an Italian company whose registered office is located in Veneto.
The professional activity is carried out entirely on Italian territory, more specifically in Lombardy, which forms part of the border area under the Agreement.
The taxpayer qualifies as a “reverse cross-border worker” and asks whether the regime provided for by the Agreement may apply even if the employer’s registered office is not located in a border municipality, but outside the Italian border area.
The Italian Revenue Agency’s Response
The Italian Revenue Agency clarified, by way of interpretation, that the central criterion for applying the regime is the performance of the professional activity in the border area of the State where the work is carried out.
The rules require that the worker:
- reside in a municipality located within 20 km of the border;
- carry out employment activity in the border area of the other State;
- return, in principle daily, to their State of residence.
As regards the employer, the Agreement only requires that the employer be resident in the other Contracting State, without any further territorial restrictions connected to the border area.
It follows that the location of the employer’s registered office outside the Italian border area does not prevent the application of the regime, provided that the worker effectively carries out the activity in one of the regions included in the border area – Lombardy, Piedmont, Valle d’Aosta or the Autonomous Province of Bolzano – and that all other requirements set out in the Agreement are met.
Conclusions
With Response to Ruling Request No. 126 of 2026, the Italian Revenue Agency confirmed an interpretation that is generally favourable to the application of the cross-border workers’ regime, clarifying that the relevant territorial criterion concerns only the place where the professional activity is carried out, and not the location of the employer company within the border area.
This clarification is particularly relevant in situations involving workers resident in Switzerland who carry out activities in Italy for employers not located in border municipalities, thereby broadening the cases potentially eligible for the favourable regime.
However, the exact legal framework and the verification of the subjective and territorial requirements remain delicate aspects that require a case-by-case analysis.
In this context, A&P assists companies and workers in assessing the applicability of the cross-border workers’ regime and in correctly managing tax obligations, including the preparation of the income tax return, in order to ensure correct tax treatment and full compliance with the regulations in force.