Belgium-Luxembourg cross-border workers

Nicolas de Limbourg 25 March 2015


Belgium-Luxembourg cross-border workers: mutual agreement signed and information regarding evidence to support presence in Luxembourg published

Following the announcement made early February, the Belgian and Luxembourg finance ministers concluded on 16 March 2015 a mutual agreement with respect to cross-border employment tax situations that confirms, retroactively as from 1 January 2015, the introduction of a derogation to the current article 15, §1 of the double tax treaty concluded between Belgium and Luxembourg.

A Belgian tax resident performing activities in Luxembourg and physically present in Belgium and/or in another third State to perform activities for a period or periods not exceeding in the aggregate 24 days in the tax year concerned is considered actually performing his/her duties in Luxembourg during the entire tax year (and vice versa). Concretely, as from 1 January 2015, a Belgian tax resident is allowed to perform activities outside Luxembourg (the usual work State) for a maximum of 24 days without altering the power of taxation in Luxembourg (i.e. not being taxed in Belgium). An amendment to the double tax treaty will confirm the mutual agreement.

The Belgian tax authorities have also published a “vade-mecum” with respect to the evidence that will enable a Belgian resident to demonstrate his/her physical presence in Luxembourg. Regarding such proofs, a distinction is made between:

  1. employees who exercise an activity for which the presence at the workplace is essential (it is impossible to carry out their activities elsewhere) (e.g. a cashier in a store): it should be enough to simply submit the employment agreement (provided it clearly states what duties are performed and where they are performed); and
  2. other employees (i.e. employees whose presence at a fixed workplace is not required or unlikely, such as a sales representative) or employees performing work that can be performed at a fixed place of work but who may also need to work at home or elsewhere) will, as before, still have to provide (various) proofs of their physical presence in Luxembourg upon request.