Circular of the Italian Tax Agency on the tax profiles of remote work and the tax discipline of frontier employees following the innovations set out in Law no. 83/2023 on the ratification of the Italy-Switzerland agreement

Edited by Francesca Tironi, Marzio Scaglioni, Giulia Spalazzi and Lorenzo Vassalli

On August 18th, 2023, the Italian Tax Agency published the circular no. 25/2023 in which it overviewed and summarized the most recent developments in the legislation and practices on the taxation of work performed through the use of agile work (so-called “smart working”) and on the subject of frontier work, in light of the changes introduced by the latest bilateral agreement between Italy and Switzerland and by Law no. 83/2023 ratifying the latter.

The first section of the circular under discussion provides for useful applicative instructions concerning the tax profiles of remote work, confirming the applicability, also with reference to agile work, of the ordinary criteria that value the physical presence of an individual in a given State: the Italian Tax Agency has thus confirmed, recalling its own interpretative clarifications more recently provided in response to the doubts of taxpayers received, that – in the absence of regulatory interventions on the issue – the criteria provided for by Art. 2 of Presidential Decree no. 917/1986 (Italian Consolidated Income Tax Act – “TUIR“) remain valid and applicable also for the identification of the tax residency of individuals who carry out a remote working activity or work in an agile modality. In this regard, it is clarified – in continuity with the conventional provisions on the subject – how work is considered to be performed in the place where the employee is physically present when he/she performs the service for which the employee is remunerated, regardless of whether the manifestation of the work performed takes place in another State, the State in which the employer to which the work is addressed is located not being relevant either.

The Italian Tax Agency has also confirmed, with regard to the so-called ‘special regime for impatriate employees’ introduced by Article 16 of Legislative Decree no. 147/2015, that said tax relief is not precluded for those who transfer their residency to Italy, while continuing to work in smart work under a foreign employer. In addition, with the aim of countering the phenomenon of fictitious transfers of residence abroad, the circular points out that the formal data of registration with the Aire and the circumstance of working (either partially or fully) remotely for a foreign entity are not in themselves sufficient elements to exclude tax residence in Italy if, from an overall assessment of the economic, patrimonial and emotional relationships, the criteria for identifying tax residence in the territory of the State are fulfilled.

Frontier employees and the new agreement between Italy and Switzerland

The second part of the circular under review is devoted to the special tax discipline dedicated to the so-called ‘frontier’ or ‘cross-border’ employees, highlighting the key aspects in light, on the one hand, of the recent developments and clarifications provided to taxpayers in response to interpellation requests and, on the other hand, of the new international agreement signed with Switzerland on 23 December 2020. Among the main innovations that it is deemed worth mentioning is the regulatory definition of the ‘frontier worker’, which is defined as any employee resident in a contracting State who:

  1. Is resident for tax purposes in a municipality the territory of which lies wholly or partly within 20 km of the border with the other Contracting State;
  2. Is employed in the frontier zone of the other State by a resident employer, a permanent establishment or a fixed base in that other State;
  3. Returns daily to his principal place of residence in the State of residence.

As for the tax regime dedicated to these subjects, the main change is the provision of a principle of concurrent taxation between the source country and the country of residence, replacing the exclusive taxation in the source country that was provided for by the bilateral agreement between Italy and Switzerland dated 1974.

Further innovations introduced by Law no. 83/2023

The last part of the circular under examination is devoted to an overview of the additional novelties introduced by the aforementioned Law No. 83/2023, briefly summarized below. For all frontier employees as defined above, as of 2024:

  • The tax-free threshold for employment income is raised from the previous €7,500 to today’s €10,000;
  • The deductibility from the total income, for the amount resulting from appropriate documentation, of the social security contributions to be paid by frontier employees to the social security institutions of the State where they work is provided for;
  • Exclusion from the IRPEF tax base of family support allowances paid to frontier employees by the social security institutions of the State where they work.

Transitory regulation

As mentioned, the new legislation summarized above will be applicable from 2024. However, a transitional regulation has been provided for, applicable until December 31st, 2023, dedicated to current frontier employees (meaning those to whom the bilateral agreement between Italy and Switzerland of 1974 applied) and who were already benefiting from the agile working modality as of March 31st, 2022: the regulation applicable to these subjects provides that the days of remote work carried out in Italy are considered to have been carried out in Switzerland up to 40% of the time actually worked in this way.

Latest news worth of consideration

We deem it useful to recall the provision contained in the Decree of July 20, 2023 of the Italian Ministry of Economy and Finance, published on July 28th, 2023 in the Italian Official Gazette no. 175, pursuant to which Switzerland has been removed from the list of privileged States for IRPEF purposes set forth in the Ministerial Decree of May 4th, 1999 (the so-called “black list for natural persons”): therefore, as of 2024 Switzerland will no longer be considered a “black list” country for the purposes of natural persons’ residence.  

For a deeper discussion, please contact:

Francesca Tironi

PwC TLS Avvocati e Commercialisti


Marzio Scaglioni

PwC TLS Avvocati e Commercialisti  


Giulia Spalazzi

PwC TLS Avvocati e Commercialisti