Update: COVID-19 Belgian-Dutch tax agreement and German-Dutch tax agreement on cross-border workers and | Deloitte Nederland

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Update: COVID-19 Belgian-Dutch tax agreement and German-Dutch tax agreement on cross-border workers and the social security tolerance policy

The evolution towards remote working has been accelerated by the COVID-19 pandemic. As covered by our recent tax alerts, a COVID-19 Belgian-Dutch tax agreement and German-Dutch tax agreement on cross-border workers was concluded and social security authorities agreed on a tolerance policy.

30 June 2022

Update: Social security tolerance policy

During the Administrative Commission’s meeting on June 14th, the social security authorities of all EEA countries and Switzerland have decided to implement a “no-impact” position in view of determining the applicable social security legislation from 1 July 2022 up until 31 December 2022. Whether and how this social security tolerance transitional period would be implemented by each member state is uncertain. In the meantime the social security authorities in the triangle Belgium, Netherlands, Germany provided an official communication in this respect. We understand that:

  • The transitional period has the same effects as the COVID-19 measures so there is no change in the competent Member State due to working from home of 25% or more.
  • This transitional period aligns with the COVID-19 no-impact period ending 30 June 2022 as the pandemic no longer constitutes a force majeure situation that temporarily suspends the operation of the designation rules for work patterns (such as increased home work) that have been altered by the pandemic.
  • The transitional period applies to both existing and new home work activities.

The above transitional period of six months allows administrations, employers and cross border commuters to better tackle possible social security effects generated by the pandemic and its aftermath. Furthermore it gives the Administrative Commission and the authorities of the EEA countries and Switzerland the opportunity to further evaluate the social security consequences of home work and to possibly conclude on structural measures regarding the social security and tax position of the cross border commuter.

Update: COVID-19 Belgian-Dutch tax agreement and German-Dutch tax agreement on cross-border workers

The Belgian / Dutch and the German / Dutch authorities concluded on a special COVID-19 tax agreement, applicable from 11 March 2020 until 30 June 2022. At this moment, there is no further extension of these tax agreements.
As of 1 July 2022, the rules included in the tax treaty between the Netherlands / Belgium and the Netherlands / Germany apply. In a nutshell, the income tax position of the cross-border commuter is as follows:

  • In the country of employment (the country where the employer is established), the employment income attributable to the working days physically performed in the country of employment is taxable in that country.
  • The cross border commuter is taxable on the world income in the residence country. The residence country provides an exemption for the employment income that is attributable to the working days physically performed in the country of employment. In principle, the employment income attributable to the working days physically performed outside the country of employment is taxable in the country of residence.

Future of work

The COVID-19 pandemic has accelerated the ‘future of work’. There is a growing need and demand among employees and employers to evaluate the long-term potential of remote working. Remote working may not be new, but now flexibility of the workforce is affecting almost all organizations.

Many employers are contemplating on a working from home policy and facilitating remote work arrangements for their local employees but also for their cross border commuters. In this respect not only the labor law, social security and tax implications are decision makers, but the ‘war for talent’ and people strategy becomes crucial as well: widening talent pools, retaining good workforce and improving the wellbeing of your employees.

The different stakeholders need to agree on priority setting and shared goals. In the end, remote working should be a success: better employee experiences and more efficient business units while limiting (tax and legal) compliance risks.

Deloitte has the technology, knowledge and practical experience to be your partner in designing and executing your future of work strategy.

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