Tax agreement for cross-border workers extended up to december 31, 2021

The Netherlands has an agreement with Belgium and Germany concerning the tax treatment of frontier workers who are working from home as a result of Covid-19. Due to their special situation, they were confronted with negative tax consequences.  Agreements have thus been made for this, which have recently been extended until the end of this fiscal year. In this article, we will explain the agreements.

Working from home at the Belgian border

Working from home has become a commonplace phenomenon due to the Covid-19 pandemic. Normally, tax is levied in the country where one works. As frontier workers are now working from home, the taxation would take place in their home country. This can lead to undesirable income tax consequences.

The above principle has therefore been temporarily suspended. This means that a Belgian employee who works in the Netherlands but temporarily works from home, will remain taxable in the Netherlands. Vice versa, a Dutch employee who works in Belgium and now works from home in the Netherlands, will remain taxable in Belgium. This rule originally applied to home working days from March 11, 2020 to June 30, 2020. It has now been extended until December 31, 2021. This measure will then be extended further should the Netherlands and Belgium come to an agreement.

Previously an agreement home workers with Germany

A similar agreement had previously been concluded with Germany. This agreement is applicable until December 31, 2021 and can be extended thereafter.

Deviation is allowed

Dutch employees who were originally working in Germany or Belgium and now work from home can also opt to have the days worked at home taxed in the Netherlands. This choice must be processed in their personal income tax return for the years 2020 and 2021. This also applies in the vice versa situation. This can sometimes be advantageous due to the lower tax tariffs on low income. In order to do so, a few formal conditions must be met.

Social security

Frontier workers who are working from home due to the Covid-19 pandemic, are not confronted with changes in the social security position until 1 January 2022. The Dutch social security authorities will treat a change in work pattern due to the pandemic as a continuation of the normal work pattern. This is applicable for employee working from home in the Netherlands.