Frontalieri, branches and alternative structures

The cross-border worker as relationship manager

A distinctive feature of Lugano banking is that many of the relationship managers who serve Italian clients are themselves Italian residents. They live in the provinces of Como, Varese or Verbano-Cusio-Ossola and cross the border every morning as frontalieri. Chapter E.I gives the figures for the banks and Chapter H.I for the crossborder labour market as a whole. The frontaliere brings language, cultural familiarity and often a personal network in Lombardy, which explains why Ticino banks have long employed them for the Italian desk. The same features create specific legal risks, because the employee spends evenings, weekends and part of his working time in the country whose market rules the bank must respect.

Employment taxation is the first issue. The agreement between Switzerland and Italy on the taxation of cross-border workers, signed on 23 December 2020 and in force since 17 July 2023 with effect from 1 January 2024, replaced the regime of 1974 and is treated in Chapter H.I. The Protocol amending it, signed in Rome on 30 May 2024 and in Bern on 6 June 2024 and ratified by Italy through Law No. 217 of 29 December 2025, allows cross-border workers to perform up to 25 per cent of their annual working time by telework from their state of residence without losing their status. Telework days within this limit are treated as work performed in the employer's state. The Protocol also allows up to 45 days per calendar year of absence from the state of residence for professional reasons. Its substantive provisions apply retroactively from 1 January 2024.¹

Telework, market access and the permanent establishment

The telework rule solves a question of income tax for the employee. It does not solve the questions of market access and corporate tax for the bank. A relationship manager who works from his home in Varese one day a week and speaks with Italian clients from there provides the service from Italy to persons in Italy. For the purposes of Article 166 TUF and Articles 28 and 29-ter TUF this is the provision of investment services in Italy, whatever the treatment of his salary. The reverse solicitation exemption does not help much. A client's call to his Swiss bank may rest on the client's initiative, but a service rendered by an employee sitting in Italy is hard to describe as a service provided from Switzerland.²

The corporate tax analysis is similar. A home office used regularly for the bank's business can be a fixed place of business of the bank in Italy if the bank requires or expects its use, and the employee who prepares and negotiates contracts from there can be a dependent agent within Article 162 TUIR. The OECD Commentary on Article 5 of the Model Convention treats a home office as a place of business of the enterprise only under certain conditions, but Italian authorities have shown in the cases described above that they read the permanent establishment concept broadly.³ Many Ticino banks have therefore excluded relationship managers who serve Italian clients from telework in Italy, or limited it to tasks without client contact. The rule reverses the logic of the Protocol: the employee may legally work from home for tax purposes, but the bank cannot allow him to serve clients from there.

Notes

1. "Frontalieri Italia–Svizzera: ratificate nuove regole su rientri e telelavoro", Edotto, 20 January 2026, https://edotto.com/articolo/frontalieri-italiasvizzera-ratificate-nuove-regole-su-rientri-e-telelavoro. See Chapter H.I for the 2020 agreement. ↩
2. Inference from Art. 28 and 29-ter TUF and from ESMA's statement of 13 January 2021 (both above). No Italian decision on telework by a foreign bank's employee has been found. ↩
3. OECD, Commentary on Article 5 of the Model Tax Convention, paras. 18–19 (home office), in the 2017 version; TUIR, Art. 162 (above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.