The Belgian and Luxembourg governments had a joint meeting yesterday in Brussels and came to the following agreement with respect to cross-border employment tax situations:
- With respect to wages taxes, a tolerance will retroactively (as from 1 January 2015) enter into force regarding the physical presence outside the (usual) country of employment. Concretely, a Belgian resident will be allowed to perform activities outside Luxembourg (the usual country of employment) for a maximum of 25 days without the power of taxation in Luxembourg being challenged (i.e. without being taxed in Belgium) (and vice versa). A mutual agreement and an amendment to article 15 of the double tax treaty concluded between Belgium and Luxembourg will confirm this.
- In order to enhance legal certainty, Belgian and Luxembourg tax authorities will publish by April 2015 joint rules regarding tax audit on cross-border workers.
- Luxembourg will increase its financial compensation to Belgium in order to finance Belgian municipalities where a significant number of residents perform a professional activity in Luxembourg.