Written by Mathilde Obert
Published on 03.06.2022 • Edited on 03.06.2022 at 09:54
Tax-free teleworking ends in July. It remains to be seen whether the social security agreements will also end on 30 June. (Photo: EU/Lukasz Kobus)
Tax agreements with Belgium, France and Germany–limiting the number of days cross-border workers can work from home without double taxation–will resume on 1 July after having been suspended during the pandemic.
The number of teleworking days will be limited to 34 days for cross-border workers from Belium, 29 days for France and 19 for Germany from 1 July. If employees exceed the limit, they will be taxed in their country of residence as well as Luxembourg.
Agreements to freeze these quotas during the pandemic started in March 2020 and have been regularly renewed since then. The last ones expire on 30 June and the finance ministry confirms that no exemptions will be made after this date “as the health situation has improved”.
Even if there is only half a year left, cross-border workers will still be entitled to their full quotas and not to half. This had already been agreed with Belgium and Germany, and the finance ministry was confident that it would also be the case for France.
And although an agreement has been reached between France and Luxembourg to increase the quota to 34 days, this is not yet in force and still has to be transposed into the double taxation agreement between the two countries.
Exceeding the limit of days spent teleworking does not necessarily mean paying more tax. It depends on the individual situation. However, there is a another quota for social security. A worker who carries out more than 25% of their activity (usually about 60 days) outside of the country where their job is located will have to join the social security system of his or her country of residence, which in this case is more expensive for the employer and the employee.
This quota, an EU-wide rule, was also frozen during the pandemic. The social security ministry at the time of publication could not confirm whether the regular regime will resume on 1 July, as for the tax agreements, and whether the roughly 60 days will be cut in half for the second half of the year or maintained in full.
This story was first published in French on Paperjam. It has been translated and edited for Delano.