Double taxation of Dutch nationals in the public sector working from home

26. March 2024

Many Dutch nationals who work in the public sector and live in Germany are contacted by their German tax office to submit a tax return in Germany. Often with retroactive effect over several years. The tax office is of the opinion that if these employees have come to Germany voluntarily and carry out an activity in Germany, e.g. home office, Germany also has the right to levy taxes on these home office days.

The tax treaty between the Netherlands and Germany (and other tax treaties) regulates how employees in the public sector are to be taxed. The most important rule is that they are taxed in the country in which the employer is based. There are some exceptions to this, e.g. if the employee is a national of the country of residence.

An exception also applies to public sector employees who are recruited in another country and work exclusively there. This includes employees of an embassy. They sometimes have Dutch nationality, but live and work in another country.

The disagreement between the Netherlands and Germany concerns this last exception. According to the German tax authorities, this means that if this employee has voluntarily emigrated to Germany and works from home, for example, these homeworking days can be taxed in Germany. No distinction is made between full homeworking and partial homeworking.

The court in Den Bosch issued a judgement on the latter in December 2023. The Court of Appeal found that Germany has no right of taxation. The literal wording of the relevant treaty article states that it must only concern work in the country of residence. Furthermore, the article is to be understood as it is meant and concerns persons who are recruited locally, for example to work in an embassy.

However, it is not clear whether the tax office shares this view. It is therefore possible that a Dutch public employee who lives in Germany and works from home will be taxed twice for these home office days. If they work partly from home, it is not possible to apply for a tax exemption for this in the Netherlands; this was prohibited by the same court.

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