Cross-border (frontalier) workers and the employer’s registered office: an employer based outside the border area does not bar the regime

The Italian Tax Authority, in its Ruling no. 126/2026 published in June, clarified that the location of the employer’s registered office outside the Italian “border area” does not, in itself, prevent the application of the cross-border (frontalier) workers’ tax regime provided for by the Italy-Switzerland Agreement of 23 December 2020. This applies provided that the employer is in any case tax-resident in Italy and that the worker meets all the requirements of Article 2(b) of the Agreement, including actually carrying out the work in one of the border Regions.

The case concerns a taxpayer who is tax-resident in Switzerland, in a border municipality of Canton Ticino, working as a pharmaceutical sales representative for an Italian company whose registered office is in Veneto, but performing her work entirely in Lombardy. Describing herself as a “reverse frontalier worker”, she asked whether she could benefit from the frontalier tax regime even though the employer’s office was not located in a border area.

The Tax Authority upholds the taxpayer’s position. The 2020 Agreement (ratified by Law no. 83 of 13 June 2023, in force since 17 July 2023 and applicable from 1 January 2024, replacing the 1974 one) defines a “frontalier worker”, in Article 2(b), as a person who resides in a municipality within 20 km of the border, carries out the work in the “border area” of the other State and returns there daily. For Italy, the border area comprises Lombardy, Piedmont, Valle d’Aosta and the Autonomous Province of Bolzano (see Circular no. 25/E of 18 August 2023). As regards the employer, the provision more generically requires only that it be “resident” of that State, with no constraint on the office being located within the border area.

In short, what matters is the place where the work is physically performed, not the employer’s office: the income is therefore taxable in Italy through withholding at source (up to 80% of the amount due, including surtaxes), with concurrent taxation in the State of residence and elimination of double taxation. It remains understood that, as clarified by the Tax Authority, neither the actual foreign residence nor the actual existence of the frontalier requirements can be verified in the ruling procedure, the Authority’s power of audit being unaffected.

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