The definition
Living in a border area and travelling every day to work in the other country, returning home daily.
Companies · Staff abroad
Working abroad as an employee
Sending someone to work abroad is not a single thing: a business trip, a posting and a transfer follow different rules on tax, contributions and paperwork. Mixing them up leads to double taxation or disputes with the authorities.
01 · The distinction
Business trip, posting, transfer: three ways of working abroad
The distinction is not a formality: it determines the worker's tax treatment, the contribution obligations and the documents required.
| Business trip | Posting | Transfer | |
|---|---|---|---|
| Duration | Temporary and occasional | Temporary but extended | Permanent or long term |
| Place of work | Stays the original one | Stays the original one | Changes permanently |
| Pay | Travel allowance or expense reimbursement | Salary, often with an allowance | A new pay arrangement |
| Taxation | Ordinary, with exemptions on allowances | Notional salaries may apply | Depends on the tax residence acquired |
| Social security document | A1 form within the EU | A1 form or bilateral agreement | Registration in the host country, with some exceptions |
The classification must be made before departure and documented: a business trip or posting letter, the expected duration, the pay arrangements. Reconstructing it afterwards, during an inspection in two different countries, is far harder.
02 · The allowances
How business trips are treated
Amounts paid for business trips are partly exempt, with different rules for trips in Italy and abroad and depending on how expenses are reimbursed.
- The flat-rate allowance is exempt up to a daily limit, which is higher for trips abroad.
- Itemised reimbursement of documented expenses does not count as income.
- Mixed reimbursement reduces the exemption limit on the allowance proportionally.
- Documented travel and transport expenses are always excluded.
- Traceable payment is a condition for the exemption of some items.
- Trips within the municipality of the workplace are treated less favourably.
Where mistakes are most common
In combining the flat-rate allowance with reimbursements.
- Paying the full allowance and also reimbursing meals and accommodation
- The exemption limit is reduced proportionally
- The excess becomes subject to tax and contributions
- It needs to be handled upstream, in the company travel policy
03 · The special regime
Notional salaries (retribuzioni convenzionali)
This regime applies to employees who work abroad on a continuous basis and as the sole purpose of their employment, when specific conditions are met.
The requirements
Work carried out abroad on a continuous basis and as the sole purpose of the employment, for a minimum period within twelve months.
Time spent abroad
The worker must stay in the foreign country for a minimum number of days, counted as the law provides.
The taxable base
A notional salary set each year by sector and band is used instead of the actual salary.
The benefit
When the actual salary is higher than the notional one, the difference is not taxed in Italy.
The regime requires the worker to remain tax resident in Italy: if residence moves abroad, the basis for it falls away and the ordinary rules on tax residency apply. The two questions must be checked together.
04 · The A1 form
Where contributions are paid
The general principle is that contributions are paid in the country where you work, but there are exceptions that allow you to keep your Italian position.
- Within the EU the principle of a single applicable legislation applies: contributions are paid in one country only.
- A posting allows contributions to stay in the home country, up to a maximum duration.
- The A1 form certifies the applicable legislation and must be requested before departure.
- For non-EU countries, bilateral social security agreements apply, where they exist.
- Without an agreement, double liability for contributions can arise.
- A worker who works in several countries has specific rules for deciding the applicable legislation.
The A1 form is the document the worker must be able to show during checks in the host country: without it, the local authorities can demand contributions there, and recovering them afterwards is complicated. It must be requested and handed over before departure.
05 · The Turin case
The rules for cross-border workers
Anyone who lives in Italy and works every day in a neighbouring country has their own set of rules, defined by bilateral agreements.
Taxation
The agreements divide the taxing rights between the country of residence and the country of work, with different rules in each agreement.
The exempt allowance
For some countries, a share of income is exempt in Italy, up to an annual amount.
The tax credit
Taxes paid abroad give the right to a credit, within the limits provided.
Contributions
As a rule in the country of work, with the A1 form certifying the position.
Switzerland
It has its own rules, distinguishing between old and new cross-border workers, and the rules are still changing.
06 · What to do
What needs to be prepared
The paperwork has to be put together beforehand, because it is needed in two legal systems at the same time.
- Business trip or posting letter stating the duration, location, duties and pay arrangements.
- A1 form or equivalent certificate, requested before departure.
- Certificate of tax residence, when needed to apply the tax treaty.
- Records of the days spent abroad, for the regimes that require them.
- Formalities in the host country: advance notification of the posting, where required.
- Coordination between the Italian payroll and any local obligations.
Many EU countries require an advance notification of the posting to their own authorities, with penalties for a company that fails to make it. It is a local formality, separate from the A1 form, and must be checked country by country before each posting.
Frequently asked
The questions that keep coming up
My employee is working in Germany for six months. Where do they pay tax?
It depends on how the arrangement is classified and on the applicable tax treaty. If they remain tax resident in Italy, the income is taxed here, with a credit for any tax paid abroad.
If the requirements for the notional salary regime are met, the Italian taxable base is calculated on notional amounts instead of the actual salary. It has to be checked case by case.
What is the A1 form and is it always needed?
It is the document that certifies which social security legislation applies to the worker, and it is needed for every move within the EU, the EEA and Switzerland.
Without it, the authorities of the host country can demand payment of local contributions. It must be requested from INPS (the Italian social security institute) before departure and given to the worker, who must be able to show it.
Are business trip allowances always exempt?
Only within the daily limits provided, and under rules that change depending on whether meals and accommodation are also reimbursed.
Paying the full flat-rate allowance and also reimbursing documented expenses reduces the exemption limit proportionally: the excess becomes subject to tax and contributions.
I am a cross-border worker in Switzerland. How does it work?
Switzerland has its own rules, distinguishing between old and new cross-border workers, and the rules have changed in recent years.
Taxation is divided between the two countries according to the applicable agreement, with an exempt amount of income in Italy up to an annual limit. It is worth having your position checked, because the differences in treatment between the categories are significant.
Let's talk
The A1 form must be requested before departure, not afterwards
Without it, the worker may be made to pay social security contributions in the host country. It is the document that prevents paying twice.