The COVID-19 friendly agreement signed in June 2020 between Switzerland and Italy on the topic of smart working, i.e. (tele)working from the home of the frontier worker will expire at the end of January 2023.

Failure to renew this agreement will bring with it consequences which must be taken into account and which were confirmed in a very recent ruling by the Revenue Agency (n. 171/2023), which confirmed the Italian position, i.e. the according to which even just 1 day of telework carried out after 1 February 2023 will cause the benefits referred to in art. 15 CDI: the frontier worker will therefore have to declare in full the income earned in Switzerland and subject himself entirely to Italian taxation.

The concept of frontier worker therefore presupposes, and imperatively, that the worker carries out his work in Switzerland, going through customs every day. Any teleworking performed in part, i.e. in the morning in presence and in the afternoon in smart working does not exempt from risks and lends itself to possible disputes.

Furthermore, the disapplication of the benefit reserved for cross-border commuters will also affect the tax monitoring obligations for financial assets held abroad, i.e. the obligation to complete the RW framework as well as the forfait of €7,500 for annual income abatement. (€10’000 since the new agreement will be in force – presumably from 2024).

Finally, it remains to mention the potential risk for the Swiss employer of being attracted to Italy by a personal permanent establishment, with all the consequences of the case.

The recent meeting in Bern between representatives of the two countries has given new impetus to speculation about the entry into force of the new text of the Agreement.

In fact, the Protocol already signed provides that the entry into force of the new text and therefore of the new “regime” will take effect starting from 1 January of the following year that of the completion of the formal approval process by both countries and in specific case what is missing is the approval by the Italian Parliament.

How likely it is that said approval will take place before 31.12.2022 therefore remains entirely in the hands of the Italian Government and in its intentions and priorities. If this ratification were to take place in the context of the approval of the Budget Law and therefore before the end of the current year, then the entry into force of the new Agreement on cross-border commuters will effectively take effect on 01.01.2023.