Skip to content Italy–France cross-border workers: income paid by the Bank of Italy is taxable exclusively in Italy
With Ruling No. 132 of 2026, the Italian Revenue Agency clarified that remuneration paid by the Bank of Italy to an employee who is tax resident in France does not benefit from the treaty regime providing for exclusive taxation in the State of residence for cross-border workers. Such income falls within the scope of Article 19 of the Convention between Italy and France, concerning government service, and is therefore taxable exclusively in Italy.
The case
The application concerns an employee of the Bank of Italy who transferred his tax residence to France, to a municipality located in the border area.
The taxpayer performs his work at a Bank of Italy office located in an Italian region bordering France, travelling to Italy on certain days of the week and carrying out the remainder of his work remotely from France.
The Applicant asks whether the remuneration received should be subject to the regime applicable to cross-border workers under Article 15(4) of the Convention between Italy and France, resulting in exclusive taxation in France, or to the rules on government service laid down in Article 19 of the same Convention.
The treaty provisions
The Convention between Italy and France for the avoidance of double taxation distinguishes the tax treatment of employment income according to the nature of the employer.
Article 15 generally governs income from employment and provides that, in the case of cross-border workers who are resident in the border area and employed in the corresponding border area of the other State, income is taxable exclusively in the State of residence.
By contrast, Article 19 of the Convention provides that remuneration paid by a State, one of its political or administrative subdivisions, or a public body in respect of services rendered to that State or body is taxable exclusively in the State paying such remuneration, subject to the exceptions provided for by the Convention.
The exception for public bodies carrying out industrial or commercial activities
Article 19(3) of the Convention provides for an exception concerning remuneration paid by public bodies in connection with an industrial or commercial activity. In such cases, the income does not fall under the government service rules laid down in Article 19(1), but instead falls within Article 15 concerning employment income. Therefore, where the relevant requirements are met, the cross-border workers’ regime may also apply, resulting in exclusive taxation in the State of residence.
However, the Additional Protocol to the Convention allows the competent authorities of Italy and France to agree on the application of Article 19 also to employees of public bodies carrying out industrial or commercial activities, such as postal or railway services. In the absence of such an agreement, the relevant remuneration remains subject to Article 15.
This exception does not, however, apply to the Bank of Italy. According to the Italian Revenue Agency, the Bank of Italy is a public-law institution which, in its capacity as the Central Bank of the Italian Republic, exclusively pursues public interests and may not operate for commercial or speculative purposes. Accordingly, no specific agreement between Italy and France is required in order for the remuneration of its employees to fall within Article 19(1).
The clarification provided by the Italian Revenue Agency and the practical consequences
In light of these principles, the Italian Revenue Agency considers the remuneration paid by the Bank of Italy to fall within the scope of Article 19(1) of the Convention. Indeed, the Bank of Italy is a public-law institution performing the functions of the Central Bank of the Italian Republic and exclusively pursuing public interests, without carrying out activities of an industrial or commercial nature.
Consequently, the regime provided for in Article 15(4) for cross-border workers does not apply, even if the employee resides in the French border area and carries out his employment activities in an Italian area bordering France. The remuneration is therefore taxable exclusively in Italy pursuant to Article 19(1) of the Convention.
Accordingly, the income must not be subject to taxation in France; and the Bank of Italy, acting as withholding agent, is required to apply Italian personal income tax (IRPEF) withholding pursuant to Article 23 of Presidential Decree No. 600/1973.