Coronavirus: impact on cross-border work Belgium-Luxembourg

Author: Peggy Criel (Legal Expert)
Read time: 3min
Publication date: 29/05/2020 - 08:49
Latest update: 29/05/2020 - 09:18

Following the agreements made with the Netherlands and Germany, Belgium has now also concluded an agreement with Luxemburg to regulate the tax situation of cross-border workers. Due to the coronavirus measures, many Belgian and Luxembourg cross-border workers work in their country of residence. This may have consequences for the applicable tax rules. On 19 May 2020, Belgium and Luxembourg therefore concluded an agreement clarifying the situation of cross-border workers in the context of the COVID-19 health crisis.

Home working days

A Belgian resident who is employed in Luxembourg is, in principle, taxable in Luxembourg on the remuneration he receives for that employment. The same rule (taxation in the State of employment) applies to a Luxembourg resident who is employed in Belgium.

Because of the measures taken by the Luxembourg or Belgian governments to combat the COVID-19 pandemic, many Luxembourg and Belgian cross-border workers are working in their country of residence.

Belgium and Luxembourg have therefore agreed that, for salaried cross-border workers, these home working days may be treated as days worked in the country where the workers would normally have worked, provided that the remuneration for these home working days is actually taxed in the other country.

This fiction cannot be applied to working days that the cross-border workers would have spent working from home or in a third State, independently of the measures to combat the COVID-19 pandemic. More specifically, it is not applicable to cross-border workers who, in accordance with their employment contract, generally carry out their employment from home.

Cross-border workers who use the fiction are obliged to apply it consistently in both Contracting States and to keep the necessary data (e.g. a written confirmation from the employer indicating which part of the home working days was carried out exclusively because of the measures related to the COVID-19 pandemic).

Duration

These agreements between Belgium and Luxembourg apply from 11 March 2020 until 30 June 2020. After 30 June, they will be renewed on a monthly basis until the end of each month if Belgium and Luxembourg agree to do so at least one week before the beginning of the month.

24-day tolerance rule

Belgium and Luxembourg had previously concluded an agreement on the impact of teleworking due to the COVID-19 pandemic on the 24-day tolerance rule. More information about this agreement can be found in our Infoflash of 20 March 2020.

We are glad to help you

If you have any questions about the agreement concluded between Belgium and Luxembourg, please contact our Legal Partners by email on innovation@partena.be or by phone on 02/549.30.20.

 

Source: Notice FPS Finance, Belgium-Luxembourg Double Taxation Treaty: agreement between competent authorities on homework carried out during the COVID-19 health crisis.

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