Cross-border employment Belgium-Luxembourg: “24-days” rule becomes “34-days” rule

In our newsflash of 20 June 2019, we referred to the negotiations regarding the double tax treaty concluded between Belgium and Luxembourg, with respect to the taxation of individuals working in a cross-border context and more specifically on the possible relaxation of the existing tolerance of 24 days. On 31 August 2021, the Belgian Prime Minister, Alexander De Croo and the Luxembourg Prime Minister, Xavier Bettel, announced a further relaxation of the 24 days rule for a post-COVID-19 “home working” era.

Belgian-Luxembourg double tax treaty

In principle, employees who are tax resident of Belgium and who perform their employment activities in Luxembourg for a Luxembourg employer, are taxable in Luxembourg on the employment income in relation to the working days spent in Luxembourg.  If those employees would work outside Luxembourg from time to time (because of teleworking from their home in Belgium or business trip to another country), the income in relation to the non-Luxembourg working days would normally become taxable in Belgium (and thus no longer in Luxembourg).

Mutual agreement of 16 March 2015 – Tolerance of 24 days

Based on a mutual agreement between (signed between Belgium and Luxembourg on 16 March 2015), an exception is foreseen to the above rules. Indeed, as from 1 January 2015, tax residents of Belgium who are working for a Luxembourg employer in Luxembourg, are allowed to perform employment activities outside Luxembourg for maximum 24 days per calendar year, while they are deemed to have performed their duties physically in Luxembourg (and vice versa).Consequently, there is a tolerance available for non-Luxembourg working days (up to a limit of 24 days), even though the employee was for example working at home, allowing Luxembourg (work state) to still tax the corresponding employment income and preventing a shift of taxation power to Belgium (home country).

As from the income year 2022 – Tolerance of 34 days

Beyond the context of the COVID-19 pandemic, Minister Vincent Van Peteghem and Pierre Gramegna agreed to continue to promote and facilitate teleworking for cross-border workers. As a result, the so-called “24-day rule” will be relaxed. Indeed, as from the income year 2022, a cross-border worker who, for example, normally exercises his/her employment activities in Luxemburg (usual State of activity), will be able to work outside Luxembourg (for example from home in Belgium) during a 34 maximum of days per calendar year, while still remaining taxable in Luxembourg.  This is a win of an extra 10 (potential home) working days compared to the current 24 days which are available (not taking into account the temporary COVID-19 tolerances which are about to expire).

Authors:  Philip Maertens or Sandrine Schaumont

Voir aussi : PwC Belgium

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