Covid-19: Cross-border telework majors – Coronavirus (COVID-19)

Teleworking remains an effective tool to contain the spread of the Covid-19 virus. Luxembourg and its neighboring countries have agreed to extend special bilateral agreements on teleworking for cross-border workers in order to avoid any impact on the current tax and social security system.

The special tax regulations will be extended until March 31, 2022 as follows:

1. Luxembourg and Germany have decided that the mutual agreement on the tax implications of teleworking, currently in force until December 31, 2021, will be extended until March 31, 2022. Consequently, until that date, the teleworking days extended under the agreement will not be taken into account in the calculation of the 19-day tolerance limit applicable to taxation.

2. Luxembourg and Belgium have decided that the mutual agreement on the tax implications of teleworking, currently in force until December 31, 2021, will be extended until March 31, 2022. The validity of the agreement is then automatically extended until June 30, 2022, unless terminated by written notice by either Luxembourg or Belgium at least 2 weeks before March 31, 2022. Consequently, until that date, the days which are in accordance with the working from home agreement will still not be taken into account in the calculation of the new tolerance threshold of 34 days applicable to taxation.

3. Luxembourg and France have decided that the mutual agreement on the tax implications of teleworking, currently in force until December 31, 2021, will be extended until March 31, 2022. The validity of the agreement is then automatically extended until June 30, 2022, unless terminated by written notice either by Luxembourg or France at least 1 week before March 31, 2022. Consequently, until that date, the days which are in accordance with the working from home agreement will still not be taken into account in the calculation of the new tolerance threshold of 34 days applicable to taxation.

The special social security regulations will be extended until June 30, 2022 as follows:

Luxembourg has agreed with Germany, Belgium and France to extend until 30 June 2022 the derogation to exclude teleworking days related to the COVID-19 crisis when determining the social security rules applicable to cross-border workers.

Consequently, all cross-border workers teleworking from their country of residence remain affiliated to the Luxembourg social security system, regardless of whether the threshold of 25% of the activity in their country of residence is reached.

The content of this article is intended to provide a general guide to the topic. Professional advice should be sought in relation to your specific circumstances.