Cross-border commuters working from home and permanent establishments

20. December 2023

Partly due to a publication in De Limburger (of 12 and 13 December 2023), confusion has arisen among cross-border commuters about the tax rules for employees who work from home in the neighbouring country.

Since 1 July this year, cross-border workers who work from home (in terms of social security) have already been able to remain covered by social security in their country of employment if they spend less than 50% of their working time working from home.

Contrary to some earlier reports, there are still no tax regulations for cross-border commuters working from home or teleworking. They still have to pay tax on their home office days in their country of residence if they work from there.

The report on tax agreements that appeared in De Limburger, among others, refers to an agreement on the subject of “permanent establishment” between the Netherlands and Belgium. The agreement is intended to provide clarity to businesses in the Netherlands and Belgium about which elements are particularly important when assessing whether employees who work from home in their country of residence constitute a permanent establishment within the meaning of Article 5 of the agreement. In practice, the home office (in one contracting state) can never be considered a permanent establishment for its business (a company of the other contracting state) if the employee works 50% or less of his/her working time for the employer concerned at home. A period of twelve months beginning or ending in the relevant tax year is measured.

However, a regulation on the income taxation of employees has not yet been adopted in this context.

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