Remote Work While on Vacation: Taxation and Rights of Cross-Border Workers

Context

At a Glance

• Withholding tax in Switzerland: Nothing changes if you work remotely from abroad
• The new Cross-Border Workers Agreement, effective January 1, 2024, does not introduce any specific prohibitions
• LAMal and AVS coverage continue as usual even while working remotely from abroad
• Notify your employer before your vacation regarding contractual and insurance matters

Key Facts

• What: Remote work by cross-border workers from a third country during vacation
• When: New regulations effective January 1, 2024
• Where: Third country (outside Italy, typically within the EU or beyond)
• Who: Cross-border workers with a G permit (employees)
• Tax: Withholding tax remains in Switzerland; tax return filed in Italy with an EU tax credit
• Coverage: LAMal remains mandatory and valid with an EHIC in the EU
• Notification: Mandatory to the employer before the remote work vacation

The tax regime remains unchanged

A cross-border worker with a G permit who works remotely from a foreign beach during vacation is in a situation that requires contractual clarity but does not entail any tax surprises. The good news: withholding tax continues to be collected exclusively in Switzerland. No two countries tax you at the same time—this is how the system has worked for cross-border workers since the signing of the Italian-Swiss Convention on March 9, 1976.

Italy recognizes the tax credit in Section CE of Form 730: this means that the amount already paid as Swiss withholding tax reduces your Italian taxable income, thereby preventing double taxation. If you are an existing cross-border worker (already registered before July 17, 2023), you are entitled to an annual exemption of €7,500 under the transitional regime (2024–2033); if you are a new cross-border worker, the exemption is €10,000. In both cases, remote work from a third country does not affect this benefit.

The New Cross-Border Workers Agreement, signed on December 23, 2020, and effective as of January 1, 2024 (Italian Law No. 83 of June 13, 2023), reaffirms the regulatory framework and introduces rules on withholdings and tax transitions, but does not add specific prohibitions on remote work from abroad. This means that even new cross-border workers need not fear any surprises: the single Swiss withholding tax remains the standard mechanism.

Mandatory Contributions: AVS, LPP, Insurance

AVS/AI/IPG contributions continue to be paid regularly (5.3% paid by the employee); accident insurance (AD/AC, 1.1% on salary up to CHF 148,200) and the LAINF contribution (0.7–1.5%) remain in effect. The LPP (occupational pension plan, 7–18% depending on age group starting at age 25) continues to accrue without interruption. Whether you’re working from Barcelona or a terrace in Portugal makes no difference: your Swiss pay stub tracks everything as if you had never left your desk at the office.

The LAMal (mandatory health insurance) remains valid during your remote work period. Cross-border workers with a G permit have the right to choose between Swiss LAMal coverage (private, with annual deductibles for adults ranging from CHF 300 to 2,500) or maintaining Italian coverage under the CMI agreement. In either case, coverage remains in effect. If you are in an EU country, the EHIC (European Health Insurance Card) guarantees access to public health services; if you travel outside the EU, contact your insurer to verify whether your coverage extends geographically.

Notification to the Employer: A Critical Issue

The real issue is not a tax matter, but rather a contractual and insurance matter. The employer must be aware that the cross-border employee is working remotely from abroad. Not because the New Agreement requires it, but because:

• Some employment contracts limit remote work to Swiss or EU territory only
• The employer’s general liability insurance, SUVA (if applicable), and accident insurance policies may have geographic exclusions
• The employer has the right to verify connection stability, availability, and performance

Communicating in writing (via email to your direct supervisor) is the proper procedure: “I will be on a remote vacation from [start date] to [end date] in [Country]. I will remain available and reachable via [phone number/email]. I confirm that I will access company systems remotely via VPN.” This clarifies the situation, avoids misunderstandings, and protects both parties.

Operational details

Three Real-World Scenarios: How It Works in Practice

Scenario 1: Long-term Cross-Border Worker with a €7,500 Exemption

A cross-border worker registered as such before July 17, 2023, is entitled to an annual €7,500 exemption (transitional regime 2024–2033). Their gross monthly pay is CHF 5,500 (approximately €5,300). Swiss withholding tax applies at both the federal and cantonal levels (average rates in Ticino: ~10% federal, plus the cantonal rate). During two weeks of remote work from Valencia, withholding tax continues to be deducted from his paycheck as usual: no interruption, no exception. Upon returning from vacation, he reports the income on the Italian 730 tax return: Italian tax (IRPEF rate of 23% up to €28,000, 33% from €28,001 to €50,000, 43% above €50,000) applies to the portion not already taxed by Switzerland thanks to the tax credit (Section CE). The benefit of the €7,500 exemption remains intact: it is a structural benefit, not tied to the physical location of employment.

Scenario 2: New Cross-Border Worker with a €10,000 Exemption

A cross-border worker who entered the system after July 17, 2023, benefits from an annual exemption of €10,000: €2,500 more than existing cross-border workers. The logic is the same: a single tax in Switzerland, a tax credit in Italy, and no double taxation. Two weeks of remote work from a resort in Croatia does not negate the benefit. The tax-free allowance continues to apply over 12 months; the remote work period is normally included in the annual calculation.

Scenario 3: LAMal During a Remote Work Vacation Abroad

The cross-border worker has Swiss LAMal coverage (CSS, Helsana, Assura, or similar). They are away for 10 days in Portugal and continue to work part-time from their laptop. The LAMal remains active and provides coverage even abroad, thanks to the EHIC card (valid in the EU/EEA). If an accident occurs—a fall, gastroenteritis, or a bruise—the coverage applies: simply present the EHIC card or document at the Portuguese emergency room. Expenses are covered (with any deductibles as specified in the LAMal contract). There is no suspension, and no extra fees for “working from abroad.” Upon returning to Switzerland, everything is in order. The Swiss LAMal makes no distinction between office work and remote work from the beach: it covers the insured person, wherever they are.

Double Taxation: How the Mechanism Works

The Italian-Swiss Agreement of March 9, 1976, established that cross-border workers pay taxes in the Swiss canton where they work. Italy recognizes this through a tax credit, entered in Section CE of the 730 tax return: it’s a line that reads “tax already paid in Switzerland = CHF X, converted to EUR: Y, recognized as a credit.” The result is that Italian taxation applies only to the “residual portion” of income—that is, the portion not yet taxed by Switzerland. No double taxation.

The New Cross-Border Workers Agreement (2024) does not change this logic; rather, it further solidifies it with new exemptions (for existing cross-border workers) and tax-free allowances (for new ones). Working from Spain, Portugal, or France for 1–2 weeks does not alter this mechanism: the Swiss withholding tax remains the sole tax, and Italy applies the tax credit.

Insurance Aspects: SUVA, Liability Insurance, Data Protection

If the cross-border worker is employed at a company location in Switzerland, SUVA (Swiss National Accident Insurance Institute) covers any accidents. If they work remotely from abroad, SUVA coverage remains tied to the employment contract: some employers extend coverage wherever the employee works (“work anywhere”), while others limit it to Switzerland or the EU. Discussing this with the employer clarifies the matter.

Corporate liability insurance (if the cross-border worker uses company equipment or handles sensitive data) may also have geographic exclusions. For example: “Coverage valid for employees working within Swiss territory”—in which case, teleworking from Morocco might not be covered. Checking the contract and informing your employer reduces this risk.

Finally, data protection: working on a public Wi-Fi network at a foreign hotel exposes you to cyber risks (data breaches, stolen credentials). The best practice is to use a VPN (virtual private network) provided by your employer, so that traffic is encrypted and your credentials are not transmitted in plain text. This is basic security common sense, not a tax requirement, but it is part of being transparent with your employer.

Key points

Practical Checklist: Before, During, and After a Remote Vacation

One Week Before

1. Send an email to your employer (immediate supervisor or HR): "I would like to work remotely from [Country] from [start date] to [end date]. I’ll remain operational and available via [phone number/email]. I confirm that I have remote access to company systems via VPN. Can you confirm that this is permitted under my employment contract?”

2. Review your employment contract: Does the section on “place of work” or “telework” specify whether international remote work is permitted? If the contract states “Switzerland only” or “EU only,” teleworking from a non-EU country could violate the terms of your contract.

3. Check your LAMal/CMI coverage: If you’re traveling to the EU, bring your EHIC (European Health Insurance Card). If you’re traveling outside the EU (Morocco, Turkey, Egypt, USA), call your insurer: “Will I remain covered if I work remotely in [Country] for 2 weeks?”

4. Backups and security: Back up your important local files. Download a reliable VPN (some employers provide one) before you leave. Do not use unsecured public Wi-Fi at hotels.

During your remote vacation

• Access company systems only via VPN, never directly over public Wi-Fi
• Stick to office hours: if you’re in the UTC+2 time zone (Portugal during summer) and the office is in UTC+1 (Ticino during summer), be available at least in the morning for synchronous meetings
• Track your work hours (timesheet, if required by the company)
• Keep receipts for extra expenses (additional internet connection, coworking space if needed)—they may be deductible as business expenses, even though working from home abroad generally does not qualify for tax breaks in Italy
• Stay reachable: check email at least twice a day, and respond within 4–6 hours

Upon Return

• No administrative formalities: the New Cross-Border Workers Agreement does not require notifications to SECO (Swiss State Secretariat for Economic Affairs) or SEM (Swiss State Secretariat for Migration) for short periods of remote work abroad
• Your paycheck remains the same
• The Italian 730 tax return includes the income as if it had never left Switzerland: Section CE applies the tax credit against the Swiss withholding tax
• No “accruals” or “allocations”: taxation is continuous, regardless of where you were physically located

When You Don’t Need to Report Anything

If the vacation is purely personal (no work):

• 2 weeks at the beach, no emails, no laptop, no meetings
• Standard vacation: your employer already knows you won’t be available
• No special reporting required, no tax implications regarding remote work

But if you turn on your laptop even for a single teleconference, then it’s a “remote vacation”: you must report it. The line is fine but important for transparency.

Internal Resources and Tools

To better understand the tax implications of your remote vacation, it’s helpful to simulate the net pay calculation:

• Calcolatore stipendio frontaliere: Simulate a pay stub with Swiss withholdings, AVS/LPP contributions, and bonuses to understand the net amount after federal and cantonal taxes
• Guida LAMal per frontalieri: Explore Swiss health coverage options, deductibles, and coverage abroad with the EHIC
• Ristorni e dichiarazione 730: Calculate your Italian tax refund and verify how the CE section applies the tax credit from Switzerland

Conclusion: Transparency = No Surprises

Working remotely from a third country while on vacation does not exempt you from Swiss tax obligations—withholding tax continues as usual—nor does it exclude you from LAMal and AVS coverage—which remain valid and in effect. What changes is your physical location: Notifying your employer of your remote work abroad is an act of contractual and insurance transparency, not an additional regulatory requirement.

The New Cross-Border Workers Agreement (effective January 1, 2024) maintains the single taxation regime in Switzerland and the Italian tax credit, without adding complexity for short-term remote work abroad. Whether you’re an “old” cross-border worker (€7,500 exemption) or a “new” one (€10,000 exemption), teleworking from Spain, Portugal, or France doesn’t affect your benefit: it continues to apply over a 12-month period, regardless of where you physically work.

When you return and receive your next paycheck: it will be identical to before. When you file your 730 tax return in April: your foreign income from the vacation period is treated as Swiss income, and the tax credit reduces your Italian taxable income. One tax, no double taxation, no surprises.