Smart border workers: what the agreement provides for (cross-border guide)

Context

In a nutshell

• Disciplines remote work for frontier workers
• Defines time thresholds for maintaining status
• Regulates the tax implications between Italy and Switzerland
• Based on the understanding between the two countries

Key facts

• What: Agreement on smart working for border workers
• When: Effective January 1, 2024
• Where: Italy and Switzerland
• Who: Frontier workers and employers
• Amount: Threshold of 40% of working time

The agreement on smart working for border workers in Switzerland represents a fundamental milestone in the framework of working relations between the two countries. Defined following the signing of the new Frontier Agreement, this legislation clarifies the terms within which a worker can carry out their activity in an agile manner without losing their status as a frontier worker. The discipline fits into the context of the Convention to avoid double taxation, allowing a more flexible management of work performance while maintaining the centrality of the usual workplace in Switzerland. The regulatory framework, which entered into force on 1 January 2024, aims to offer legal certainty to Swiss employers and employees residing in Italy, by precisely defining the time limits for teleworking. The legislation applies to workers who return daily to their State of residence, ensuring that the activities carried out in smart working are correctly framed for tax purposes

Operational details

The practical analysis of the agreement reveals significant changes for professionals planning their activities between Italy and the Confederacy. Unlike the previous norm, which did not explicitly address the mode of smart working, the current agreement provides a defined framework. The worker intending to use telework must coordinate with their employer to ensure that the count of working days in Italy is in line with the agreed directives. It is important to note that, in addition to taxation, smart working also affects insurance coverage. In Switzerland, the obligation to insure against accidents (LAINF) and social benefits must also be guaranteed for the hours worked remotely. The comparison between the on-site and hybrid work regimes highlights the necessity of using the salary calculator as an essential tool for those who wish to estimate their net monthly income based on the number of days spent in smart working. While work in Switzerland involves a tax withholding at source managed by the cantonal authorities, the activity in smart working must be properly documented to avoid complications in the declaration of income in Italy, where the frontaliere must avoid double taxation through the tax credit. Swiss companies, on the other hand, must set up systems for tracking absences that meet the requirements of the tax authorities, ensuring that the 40% threshold is not exceeded. This rigor is necessary to maintain the fiscal benefits provided by the agreement. For workers, transparency in communication with the employer is key to avoiding a change in the mode of work that results in a loss of benefits or unexpected tax liabilities. Consulting an expert in cost of living can also help assess whether, despite the flexibility offered, the economic convenience of transnational work remains unchanged in the medium term.

Key points

To properly implement smart working, the border worker must follow a strict procedure that starts from the definition of the employment contract. The employer must formalize in writing the possibility of carrying out remote activities, specifying the number of days or the percentage of time dedicated to this mode. It is necessary to keep an up-to-date record of the working days carried out in Italy and those carried out in Switzerland. This register constitutes the essential documentary evidence in case of checks by the Swiss Revenue Agency or the Swiss tax authorities (AFC/ESTV).

Operational steps

The first step for those who start or modify an employment contract is to verify the compatibility of the job with teleworking. Subsequently, it is essential to ensure that the employer is aware of the contributory and tax implications related to exceeding the 40% threshold. Once the percentage of smart working has been defined, the worker must fill in the tax at source form, reporting any changes that could affect the calculation of withholdings. It is advisable to regularly consult your calcolatore stipendio to verify that the deductions correspond to the actual employment situation, considering that social security contributions such as AVS/AI/IPG remain due according to Swiss rates.

Finally, the worker must make sure to declare

Source: vipiu.it