Update COVID-19 and cross-border employment: agreement with Luxembourg extended


In our newsflash of 28 August 2020 we announced the extension of the mutual agreement between Belgium and Luxembourg, which includes a “force majeure tolerance” for cross-border workers in relation to COVID-19 (travel) restrictions. Based on the current infection rate in Europe, it is clear that the COVID-19 health crisis is not over yet. Awaiting the vaccine distribution, many employees still have to work at home in the foreseeable future. 

Therefore, a further extension of the mutual agreement of 19 May 2020 concluded between Belgium and Luxembourg is now announced. The neutralisation of home working days due to the COVID-19 pandemic will be prolonged until 31 March 2021. Cross-border workers may thus continue to work from home until 31 March 2021 without shifting “taxation rights” (in relation to their employment income) to their country of tax residence. 

Note: the COVID-19 mutual agreements (between Belgium and France / Germany / the Netherlands / Luxembourg) allow for a fiction in relation to the employment income linked to the “home working days” solely due to the measures taken by the governments of the respective countries to combat the COVID-19 pandemic. If certain conditions are met, and the employee chooses to apply the fiction, these “forced home working days” are deemed to be spent by the employee in the state where the cross-border worker would have exercised the employment in case no such measures had been taken.

In our newsflash of 25 May 2020, we mentioned that the tolerance agreed between Belgium and Luxembourg applies retroactively as from 11 March until 30 June 2020 but that it could be extended if the competent authorities of both countries timely decide to do so. This mutual agreement was extended a first time until 31 August 2020 (see our newsflash of 24 June 2020), and once more until 31 December (see our newsflash of 28 August 2020). The competent Luxembourg and Belgian authorities have now agreed to extend the agreement until 31 March 2021. It remains to be seen whether any further extensions (after 31 March 2021) will be made applicable.

After the recent extensions of the agreement with France (see our newsflash of 9 December 2020) and the agreement with the Netherlands (see our newsflash of 10 December 2020), the agreement with Luxembourg is the third of the COVID-19 mutual agreements between Belgium and its neighbouring countries which is made applicable beyond income year 2020. We anticipate that a similar extension will become applicable with regard to the agreement concluded between Belgium and Germany.

We will follow-up on any further developments in this respect. 

If you have any further questions, please do not hesitate to contact Sandrine Schaumont or Philip Maertens.