UPDATE
Teleworking due to COVID 19: Luxembourg mutual agreements with Germany, Belgium and France will remain in force until the end of 2021
As covered more into detail here, a new agreement has been signed between Belgium and Luxembourg in order to continue to apply until 31 December 2021 the mutual agreement concluded between both countries on 19 May 2020.
Same agreement has been signed between France and Luxembourg in order to continue to apply, also until 31 December 2021, the mutual agreement concluded between both countries on 16 July 2020.
As a consequence, subject to conditions, the days worked from home by Belgian and French tax residents due to Covid-19 are not counted towards the thresholds provided (24 days and 34 days starting 2022 for Belgium, 29 days for France) and the relating employment income remains therefore in principle taxable in Luxembourg.
UPDATE
Teleworking due to COVID 19: Luxembourg mutual agreement with Germany will remain in force at least until the end of 2021
As covered in more detail here, a new agreement has been signed between Belgium and Luxembourg in order to continue to apply the mutual agreement concluded between both countries on 19 May 2020 until 31 December 2021.
As a consequence, subject to conditions, the days worked from home by German tax residents due to Covid-19 are not counted towards the thresholds provided for by the treaty (19 days) and the relating employment income remains therefore in principle taxable in Luxembourg.
Since the start of the Covid-19 crisis, teleworking has been largely used as a measure to curb the spread of the virus, becoming even a requirement for all workers able to do so.
COVID 19 being acknowledged as a case of force majeure, Luxembourg and the governments of the three bordering countries had reached an agreement to relax the double tax treaty measures that impose a limit on the amount of days cross-border workers can work outside Luxembourg before being taxed in their country of residence.
As a consequence, since March 2020, the days worked from home by Belgian, French and German tax residents due to Covid-19 are, subject to conditions, not counted towards the thresholds provided for by the treaties (respectively 24, 29 and 19 days). The relating employment income remains therefore in principle taxable in Luxembourg.
On June 15, 2021 the Government announced that the mutual agreement concluded with Belgium has been extended until the end of September 2021.
On June 17, 2021 the same announcement has been made regarding the mutual agreement concluded with France.
As concerns German cross-border workers, the mutual agreement concluded on October 7, 2020 provided for an automatic extension from month to month until withdrawal by one of the parties. In the absence of withdrawal, this agreement remains in force as well.
For any further questions or assistance, please do not hesitate to contact your trusted Tiberghien advisor.
Michiel Boeren - Partner (michiel.boeren@tiberghien.com)
Maxime Grosjean - Senior Associate (maxime.grosjean@tiberghien.com)
Emma Fontenaud - Associate (emma.fontenaud@tiberghien.com)
Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of:
- Koen Morbée (International and EU corporate tax, koen.morbee@tiberghien.com);
- Michiel Boeren (International and EU corporate tax, michiel.boeren@tiberghien.com);
- Katrien Bollen (HR tax and global mobility, katrien.bollen@tiberghien.com);
- Ben Plessers (Transfer Pricing and Valuations, ben.plessers@tiberghien.com);
- Gert Vranckx (VAT, customs, excises and other indirect taxes, gert.vranckx@tiberghien.com);
- Rik Smet (International and EU corporate tax, rik.smet@tiberghien.com).
In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board.
This newsflash is for information purposes only and cannot be relied upon as legal advice.
