Remote border crossing: taxes and fees from the holiday

Context

In brief

• Withholding tax remains in Switzerland, does not change if you work from abroad
• AVS/LPP/LAMal remain active for cross-border workers with a Swiss employer
• New agreement 2024: threshold €7,500 (old) or €10,000 (new cross-border workers)
• Notify employer: contractual and insurance obligation

Key facts

• What: Remote work from a third country for cross-border workers with a Swiss employer
• When: Rules apply from 1 January 2024 (new agreement)
• Where: Any country outside Switzerland and Italy
• Who: Cross-border workers G (weekly cross-border workers)
• Taxation: Swiss withholding tax 5.3% (AVS/AI/IPG employee)
• Threshold: €7,500 (cross-border workers pre-17/7/2023) or €10,000 (new)
• Insurance: LAMal mandatory, CHF 300–2500 annual deductible

A cross-border worker who spends three weeks in Portugal continuing to work remotely for their Ticino-based employer faces a recurring question: how is the income taxed? Which country has the right to tax it?

The answer is clear: the withholding tax remains in Switzerland. The new physical place of work (the third country) does not have the right to tax the employment income because the relationship remains subordinate to a Swiss employer. The legal basis is the Convention between Italy and Switzerland of 9 March 1976 on double taxation and the New Cross-Border Workers Agreement which came into force on 1 January 2024 (Law 83 of 13 June 2023 for Italy). These instruments clarify that taxation follows the location of the employer, not the location of the employee at the time of work.

Taxation: the income remains Swiss

Concretely, a cross-border worker earning CHF 60,000 annually continues to pay AVS/AI/IPG at 5.3% (Swiss employee contribution), amounting to CHF 3,180 annually, regardless of where they are during the contract. Additional contributions (AD/AC at 1.1% up to CHF 148,200 of income, LAINF 0.7–1.5% for accidents, LPP 7–18% for pension according to age bracket) remain unchanged.

Italy avoids double taxation through the tax credit in the CE section of the 730 declaration, where the cross-border worker declares the Swiss income and recovers the tax withheld in Switzerland. The mechanism is automatic for cross-border workers who complete the declaration: the Tax Agency recognizes the payment made in Switzerland and deducts it from the Italian IRPEF.

The new 2024 agreement and the thresholds

With the New Cross-Border Workers Agreement, cross-border workers already classified as such before 17 July 2023 benefit from a threshold of €7,500 on income, valid until 2033 in a transitional regime. Cross-border workers hired after that date have a threshold of €10,000. This partial exemption remains valid even in the case of remote work from abroad during holidays, and does not require special notification to Swiss or Italian authorities if the vacation falls within normal limits (up to 4–6 weeks). However, notifying the employer remains mandatory both contractually and insurancely.

Operational details

AVS, LPP and LAMal during remote work

While withholding tax follows the employer's location, pension and insurance rights require special attention. AVS (old-age and survivors' insurance) and AI (disability insurance) continue to accrue contribution rights, regardless of where the cross-border worker is during remote work.

The LPP (occupational pension scheme) continues regularly: if the employer has a collective plan (as in almost all Swiss companies), contributions follow the age bracket table of the cross-border worker. If the cross-border worker turns 25 during a work break, LPP enrollment kicks in and the employer starts contributing the purpose quota (7–18% of gross income).

LAMal (health insurance) is the most delicate point. Category G cross-border workers (weekly cross-border workers, representing almost all Ticino-Italy commuters) have the option to remain insured in Switzerland or switch to the Italian INPS system. If they stay in Switzerland, they maintain the annual deductible between CHF 300 and CHF 2500 for adults. During remote work, LAMal remains valid.

A practical issue: if the cross-border worker stays more than 90 days in a third country, they might lose their weekly cross-border status for that tax declaration, with consequences for deductibles and residence rights. For normal vacations (up to 4–6 weeks), there are no risks.

Accident and liability coverage

LAINF (Law on Accident Insurance) covers work-related accidents, wherever the cross-border worker is. If a fall down the stairs during home office in Portugal results in an injury, Swiss LAINF responds regularly. The employer remains responsible for keeping LAINF coverage active, without the need for additional communications for remote work.

However, if the cross-border worker engages in activities in violation of the agreement with the employer (for example, working from a country where the contract explicitly prohibits it) and gets injured, civil liability may shift to the employee or be contested by the insurer. Therefore, notifying the employer in advance is both a legal protection and a practical convention. The complete LAMal coverage for cross-border workers explores specific options.

Useful tools for your case

To verify your within/over 20 km tax scenario, use the net salary calculator and the tax return guide.

Key points

Practical procedure: the 5 steps

If you are planning a remote vacation, following these steps can reduce the risks of misunderstandings or contractual violations.

1. Read the employment contract. Check if it contains clauses on working from abroad, limits on days/months of remote work abroad, or geographical exclusions. Many Swiss contracts allow up to 2–4 weeks without authorization; beyond that, HR approval is required.

2. Notify your employer at least 2–3 weeks in advance. Send a formal email to the HR manager indicating: the vacation period, the country of work, and your contact details during regular working hours. An example: "From August 12 to 26, I will be on vacation in Barcelona, but I will continue to work remotely. I will remain reachable via email."

3. Verify VPN coverage and data confidentiality. Your employer may require an encrypted connection to protect company data. Set up a company or personal VPN before departure.

4. Do not change your address of residence. If the cross-border commuter intends to actually change their residence from Ticino to a third country, the cross-border commuter status changes radically and may lose AVS and VAT rights. For vacations, remain registered at your Ticino address.

5. Optional communication to the Tax Agency. If the remote vacation exceeds 4 weeks, consider notifying via PEC to your CAF or the Tax Agency that you will continue to work remotely. This is not mandatory for short vacations, but it avoids surprises in case of subsequent verification.

Calculate your net income and check refunds

To evaluate the precise tax impact of your situation, use the cross-border tax calculator. Enter your gross income, start date as a cross-border commuter, and you will get an estimate of the net income after AVS/LPP/LAMal.

With the new 2024 agreement and the allowances €7.500–€10.000, many cross-border commuters discover they are entitled to refunds of taxes paid in excess in previous years. Consult the guide how to request cross-border refunds to see if it applies to your situation.

The tax implications of remote work are complex, but the basic principle remains simple: the employer decides the country of taxation. We keep your rights transparent and updated to the 2024 regulations.