As described in our newsflash of 7 May 2020, Belgium has reached an agreement with the Netherlands on a more general force majeure approach. And things are still moving forward. Recently Belgium has concluded a mutual agreement with Germany concerning the situation of cross border workers working from home in the context of the COVID-19 pandemic. The tolerance applies retroactively as from March, 11, 2020 until May 31, 2020 but it can be extended if the competent authorities of both countries timely decide to do so.
The agreement is very similar to the agreement which was concluded last week between Belgium and the Netherlands. Specifically, it is agreed that for purposes of article 15 paragraph 1 of the Convention, the salary linked to the days worked from home solely due to the measures taken to combat the COVID-19 pandemic by the German or Belgian Government, may be deemed to be spent in the State (Belgium or Germany) where the cross-border worker would have exercised the employment in case no such measures had to be taken. Again, similar conditions apply as in the agreement concluded between the Netherlands and Belgium. Hence, this fiction cannot be applied in relation to working days during which the cross-border worker, regardless of the COVID-19 measures, would have worked from home, in a third country or generally exercises their employment from home. The fiction must also be used consistently and the taxpayer must keep available all necessary documents of prove that he or she was unable to work in the other state. Finally, the fiction can only apply when no double exemption would arise and it is demonstrated the in income is actually taxed in the other state. However contrary to what is foreseen in the mutual agreement concluded with the Netherlands, in the agreement with Germany does not foresee any specific rules on taxation of income related to non-working days due to the COVID-19 measures taken.
We will further follow-up on the developments between Belgium and in other neighbouring countries.