Covid 19 - Taxation of Luxembourg cross-border workers
Posted - 03.04.2020
Working from home has been imposed as a preventative measure to reduce the spread of the Covid-19 pandemic in Luxembourg as well as in the border countries. However, this may lead the cross-border workers exceeding the maximum number of homeworking days provided by the double tax treaties ("DTTs") concluded between Luxembourg and the border countries. In effect, French tax residents working from home more than 29 days per year, German residents working from home more than 19 days per year and Belgian residents working from home more than 24 days per year, should also be taxable in their country of residence on income related to the homeworking days (instead of being only taxable in Luxembourg).
- In order to simplify the administrative procedures, the respective Belgium and Luxembourg Governments have agreed that the current COVID-19 crisis constitutes a “Force Majeure” for the purpose of the application of the Luxembourg-Belgium DTT. Consequently, as from 14 March 2020, remote working days performed from home in Belgium are not counted towards the 24-day tolerance rule. This measure will apply until a new order is issued.
- The same agreement has been made between the French and Luxembourg Governments.
- Germany and Luxembourg signed an agreement on 3 April 2020 confirming that German cross-border workers who are employees can work from home and maintain their tax status to the extent that the homeworking is due the Covid-19-related measures (the agreement doesn’t affect employees whose contract specifically provides for teleworking). Under these circumstances, homeworking days will be treated as days worked in Luxembourg. The agreement applies to homeworking performed between 11 March and 30 April and will automatically be renewed for one month at the end of each month unless one of the competent authorities terminates it. Cross-border workers will have to keep for [their]records, a certificate from the employer certifying the number of homeworking days performed due to the COVID-19 pandemic.