In our newsflash of 13 March 2020, we highlighted that since the COVID-19 outbreak many companies find themselves confronted with questions regarding unforeseen and forced changes in the working pattern of employees who perform activities in surrounding countries (such as Luxembourg, The Netherlands, Germany and France).
One of the main questions that arises is whether the coronavirus could qualify as a case of “force majeure”, by which a day worked at home (in Belgium, instead of the habitual place of work outside of Belgium) could be disregarded for tax purposes? Based on our first contacts with the Belgian tax authorities in this respect, it seemed that there would be no such tolerance applicable.
In our newsflash of 17 March 2020 we informed you that:
(1) the Belgian and Luxembourg tax authorities have agreed that the current situation linked to the coronavirus constitutes a case of “force majeure”, for which no day (e.g. home working) in Belgium is to be counted under the 24-days rule (of allowed physical presence outside the territory of Luxembourg during working days), as from Saturday 14 March 2020.
(2) the Belgian and French tax authorities considered that the current situation related to the coronavirus meets all the characteristics of a “force majeure situation”. Consequently, as from Saturday 14 March 2020, the presence of a French frontier worker at his place of residence (in particular for teleworking) will not be taken into account for the calculation of the 30-days period (of allowed physical presence during working days outside the border area).
For the sake of clarity – these two measures stand to date and can be applied.
In addition to these measures, we also raised the question whether the Belgian tax authorities, from a Belgian income tax perspective would apply the ‘force majeure’ approach in a more general manner, notably to other treaty situations, such as for example salary split / split taxation.
Based on further contacts with the tax authorities this week, it is clear that for other double tax treaties (for example applicable to Belgian tax residents working in France, The Netherlands or Germany) the normal ‘tax treaty rules’ will remain applicable and no general tolerance is foreseen for now.
This means that – until further notice – in a situation of salary split / split taxation or full taxation abroad, for tax residents of Belgium, who under normal circumstances work abroad or who partially work abroad, the home working days (spent in Belgium) will follow the normal taxation rules, triggering taxation in Belgium.
Of course, we are following up closely if this point of view would change in the near future also based on points of view taken by neighbouring countries and we are providing arguments to support and apply a further tolerance (with other countries) in practice.
In the meantime, we strongly advisable to closely monitor where your workforce is working to allow for the correct actions to be taken in due time (for example with respect to the Belgian wage withholding taxes).