Remote Work While on Vacation: Taxation and Rights of Cross-Border Workers (cross-border guide)

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 December 9, 1976.

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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, 35% 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

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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

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