In line with the OECD Model Convention, the treaty for the avoidance of double taxation concluded between Belgium and Luxembourg applies the ‘Work State’ principle. This means that a resident of a country working in another country is taxable in the country where the activity is performed.
The Work State principle implies that a Belgian resident, who works for an employer in Luxembourg, but who sometimes works from home (in Belgium) or in another country, is subject to tax in Belgium for the days on which they are not physically present and working in Luxembourg.
For cross-border workers, this situation can easily lead to an apportionment of the right to levy taxes between Belgium and Luxembourg. This is why the ‘24-day rule’ was introduced as of 1 January 2015.
The original agreement was concluded on 16 March 2015 between the two countries. According to this agreement, a worker (who is a tax resident in Belgium and employed by a Luxembourgish employer) may spend a maximum of 24 working days outside the territory of Luxembourg (for example at their home office in Belgium or in a third country), whilst the professional income continues to be fully taxable in Luxembourg (thus meaning there is no shift of entitlement to levy tax to Belgium). The same also applies when the situation is the other way around (i.e. a tax resident in Luxembourg who works in Belgium for a Belgian employer). Note that if the limit of 24 days is exceeded, the ‘tolerance’ is not applicable and the worker would in principle be taxable in the State of residence for all the working days that are not spent in their ‘normal’ State of employment.
On 31 August 2021, Belgium and Luxembourg signed an avenant to the tax treaty in order to extend the 24-day limit to 34 days. This avenant makes remote working (slightly) easier for cross-border workers as they can now work an extra 10 days outside of their normal State of employment without triggering an apportionment of the right to levy tax between both countries.
The extension to 34 days is now official. The Protocol was published on 20 March 2023 in the Belgian Official Gazette and is applicable as from 1 January 2022.