Cross-border Assessment 2021

Dossier 2: Impact analysis into the future of working from home for cross-border workers post-COVID-19

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Dossier 2: Impactanalyse naar de toekomst van thuiswerken voor grensarbeiders na COVID-19

Dossier 2: Impact analysis into the future of working from home for cross-border workers post-COVID-19


Prof. Dr. M. J.G.A.M. Weerepas

Pim Mertens

Martin Unfried


Working from home increasingly became the norm during the COVID-19 pandemic. With working from home being encouraged and in some cases made compulsory, the huge increase in people working in this way should come as no surprise. According to EU figures, employees worked approximately 40% of paid hours from home during the pandemic.[1] In the case of the Netherlands, 49% worked from home all or part of the time.[2] Cross- border workers were no exception to this phenomenon. It is expected that workers will continue to work from home to some extent after the crisis, and a large number of them also want to work from home to a certain degree post-COVID.[3] While employers are striving to facilitate working from home and adjusting their policies accordingly, politicians are vividly debating the topic of working from home and plans to legislate on it. Various initiatives have been developed to formalize working from home.

Policy for the Netherlands, Germany, and Belgium

In the Netherlands, MPs Van Weijenberg[4] (D66) and Smeulders[5] (GroenLinks) submitted a private member’s law entitled Wet werken waar je wil (Work Where You Want Act) on 21 January 2021.[6] By amending the Wet flexibel werken (Wfw, Flexible Work Act),[7] the proposed legislation aims to bring the right for an employee to change their location of work in line with their existing right to adapt their working hours. The potential impact of that law on cross-border workers was commented on during the internet consultation of the Council of State, with reference being made to the ‘Leidraad Grenseffecten’ (guideline on effects of Dutch central government legislation on border regions): ‘Problems of this nature must also be sufficiently addressed as part of proper preparations for a legal amendment.’[8] More specifically, such an amendment may affect tax and social security arrangements for cross- border workers if they choose to work from home. As a result, the initiators are calling on the Dutch government to enter into talks with neighbouring countries in order to relax the rules on tax and contributions.

Also Members of the German Bundestag have recently proposed a new law to promote and facilitate mobile working at a federal level.[9] However, this initiative has been postponed until after the elections. In Belgium, instead, a Ministerial Decree has already made working from home during the COVID-19 pandemic compulsory, with employers having a duty to register the number of workers present at their workplace. With the entry into force of the final step of the Belgian ‘Zomerplan 2021’ (2021 summer plan), the joined governmental Consultation Committee of Belgium (Overlegcomité [10])  has called on all employers to adopt mobile working as a standard practice.[11]

Socio-economic impact of working from home

Whether cross-border workers work from home on a full or partial basis, this has consequences for the question, which national regulations and legislation applies to them. This is because of relocating the physical place of work from the Member State of employment to the Member State of residence. This relocation primarily affects tax and social security allocation rules, but also has other consequences. It should be noted that bilateral (tax) or unilateral (social security) decisions temporarily neutralized these effects during the COVID-19 pandemic.


EU Member States designed their bilateral tax treaties in emulation of the OECD Model Tax Convention on Income and on Capital, with Article 15 of the Tax Convention Netherlands-Belgium, Article 14 Netherlands-Germany, and Article 15 Belgium-Germany largely following Article 15 of the OECD Convention. The allocation rules often assign the Member State of residence the right to levy tax when the employee is working from home, as that is the location at which the work is performed. Exceptionally, the Belgium-Germany Tax Convention has a protocol on cross-border workers under which the income of a cross-border worker who lives in a border area, works in the other Member State and returns to the Member State of residence on a daily basis is taxed in the Member State of residence.[12]

In many ‘classic’ cases of frontier work, working from home some or all of the time would therefore lead to a full or partial shift of the right to levy taxes from the Member State of employment to the Member State of residence.[13]

Compulsory insurance

An important principle of Regulation (EC) No 883/2004 is that the worker is subject to the legislation of only one Member State.[14] If a person is working from home by choice or by requirement, they are performing work in fact in both the Member State of residence and the Member State of employment. This means that the worker performs work simultaneously in two or more Member States, a situation regulated by Article 13(1)(a) of Regulation (EC) No 883/2004 in conjunction with Article 14(8) of Regulation (EC) No 987/2009. The allocation rules state that the legislation of the Member State of residence applies to the worker if they spend 25% of more of their working time in the Member State of residence or receive 25% or more of their salary in the Member State of residence. Therefore, for many ‘classic’ cases of cross-border workers, the applicable social security cover shifts again from the Member State of employment to the Member State of residence if the worker works from home for a considerable amount of time (for example, two out of five working days).

Mismatch between tax and social security

Working from home can result in a mismatch between tax and social security contributions, see table 4. For example, the right to levy taxes may be allocated to a Member State that is not the State in which the worker must take out compulsory social insurance.

This mismatch between tax and social security contributions can be either disadvantageous or advantageous depending on the differences in tax and contribution rates in different Member States. If contributions in the Member State of residence are higher than in the Member State of employment, this may also result in higher financial burdens for the employer. Additional consequences may occur in the form of an increased administrative burden, loss of tax credits, decoupling of non-statutory social security, and a shift in health insurance cover.

From a financial and administrative point of view, working from home can therefore have major consequences for both employer and employee. This is also reflected in table 5 below, which shows a simplified example of a single cross-border worker with an average income.[15]

Alongside the personal financial consequences, the increased costs and associated complexity of working from home can be an obstacle to working as a cross-border worker, employing cross-border workers, and facilitating working from home for this category of worker. This has implications for the sustainable socio-economic development of the cross-border labour market as a whole.

European integration: a ban on working from home?

In order to avoid financial consequences, employers could conceivably make a distinction between resident and non-resident workers and thereby deny cross-border workers the opportunity to work from home. The proposed laws raise the important question of whether employers are permitted to make this distinction. The Dutch act provides for an exception for a ‘compelling business or service interest’: the explanatory memorandum to the legislation refers to, among other things, serious problems of a financial or organizational nature. It is not known whether these cross-border effects of working from home fall under this category; however, this could impede the free movement of workers. In addition, the question arises whether, if working from home is qualified as a right, it should be considered a ‘social advantage’ under Regulation (EU) 492/2011. In that case, it is likely that the non- discrimination provisions would prevent such a social benefit from being conditional on residence.

Cross-border policy on working from home

In view of both European integration and the socio-economic development of both cross-border workers and border regions, it is not desirable to allow the cross-border effects of working from home to occur or to deny cross- border workers the opportunity to work from home. Especially from the perspective of cohesion within the Euregion, these effects do not do justice to the equality between cross-border workers and their colleagues (or neighbours) who are not cross-border workers. It is therefore encouraging that a working-from-home tax protocol for cross-border workers is being explored bilaterally. The Netherlands and Germany are investigating such an arrangement, in line with an commitment undertaken by the Dutch state secretaries of finance towards the Dutch House of Representatives.[16]

In order to avoid mismatches, holistic action should be taken with regard to both tax and social security. The chances of success in the short term by reviewing Regulation (EC) No 883/2004 are minimal. More promising are the possibilities offered by Article 16 of Regulation (EC) No 883/2004 for cross-border workers as a group or by Article 8(2) of Regulation (EC) No 883/2004 via bilateral or multilateral treaties. Such solutions can be integrated into existing governance structures.



Eurofound, Report Living, working and COVID-19, 2020, p. 59. According to TNO, 49% of employees in the Netherlands were working from home some or all of the time by March 2021.


TNO, De impact van de COVID-19 pandemie op werknemers, TNO, Leiden: 2021.


See also Eurofound, Report Living, working and COVID-19, 2021, p. 3:73%


Replaced by De Jong (D66).


Replaced by Maatoug (GroenLinks).


Parliamentary Papers II, 2020-21, 35 714, no. 2, last updated in Parliamentary Papers II, 2020-21, 35 714, no. 5


Parliamentary Documents II, 2020-21, 35 714, no. 3.


Parliamentary Documents II, 2020-21, 35 714, no. 4, p. 8-9.


Referentenentwurf des Bundesministeriums für Arbeit und Soziales eines Gesetzes zur mobilen Arbeit.


The Overlegcomité is a body in which the minister-presidents and government members of the various Belgian governments consult each other in order to maintain a degree of coherence in policy and prevent or settle conflicts. As a result of the latest state reform, Belgium currently has six governments.

[11], Overlegcomité – Many restrictions will be lifted from 1 September onwards, nl/news/occ-2008/


Article 11, Final Protocol Belgium-Germany Treaty: ‘The border area of each signatory Member State is defined on both sides of the common border of the two States by an imaginary line drawn twenty kilometres from the border, on the understanding that the municipalities intersected by this imaginary line are included in the border area.’


Please note that if the employer is a government institution, for example a Dutch university, then according to the Dutch position the State of employment, i.e. where that institution is located, is entitled to tax the frontier worker’s income, even if she/he works from home.


For example in Article 11 of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems.


Derived from the work for the b-solutions report Working from home.


See, inter alia, the Spring Letter on Tax Motions and Commitments 2021 of the Dutch House of Representatives, Kst-35570-IX-45 (parliamentary paper) – Voorjaarsbrief fiscale moties en toezeggingen 2021 Tweede Kamer, kst-35570-IX-45.