COVID-19: Extension tax agreements with Germany and Belgium on cross-border employees

27 januari 2021 | Door:  Barry Scheer

Working from home because of COVID-19

Working from home is currently still common due to the ongoing COVID-19 pandemic. According to the general rule in tax treaties, the salary of cross-border employees (living in one country, working in another country) is normally taxed in the working country. Because of working from home, the working country will be also the country of residence, with possible unwanted income (tax) consequences.

Agreements

In April 2020, Belgium, Germany and the Netherlands have reached agreements on the tax treatment of cross-border employees who work at home.

The above mentioned general rule has therefore been temporarily suspended. This means that a Belgian or German cross-border employee who normally works in the Netherlands, but works at home temporarily may classify these home working days as days worked in the country where he/she would have worked under normal circumstances, i.e. the Netherlands, as long as these days will be taxed in the Netherlands. Conversely, a Dutchman who works normally in Belgium or Germany and now works at home in the Netherlands may choose for taxation in Belgium or Germany.

Deviation is allowed

Dutch cross-border employees who normally work in Belgium or Germany and now from home can still opt for taxation of their salary in the country of residence, the Netherlands. This choice must be incorporated in the 2020 income tax return.

Extension of agreements

The agreements with Belgium and Germany are now extended up to and including 31 March 2021.