Cross-border Impact Assessment 2017

Dossier 2: Tax Treaty Netherlands-Germany

Questions about the dossier

In March 2018, questions were raised regarding Dossier 2 of the ITEM Cross-border Impact Assessment 2017. We can imagine that such questions may exist elsewhere and in this regard we would like to share our response publically. Please find our statement regarding ‘Annex 1.3 Scenario 3: Single sole earner’ of Dossier 2 in the document below (only available in Dutch):

Entire dossier

Tax Treaty Netherlands-Germany

Professor Anouk Bollen-Vandenboorn

Kilian Heller, LL.M.

Bastiaan Didden, LL.M.

Sander Kramer, LL.M.

Professor Marjon Weerepas


The new tax treaty between the Netherlands and Germany entered into effect on 1 January 2016.[1] The cross-border impact assessment 2016 also looked at the border effects of the new tax treaty by examining the amendments to the specific treaty articles on income from employment and pension even more closely.[2] One of the recommendations in the cross-border impact assessment 2016 was to draw a comparison between the income situation of frontier workers (both Dutch and German ones) and their neighbours and colleagues.[3] The cross-border impact assessment 2017 follows up on this point with an ex-post analysis in an early stage of the border effects under the theme of ‘European integration’.[4] Based on the detailed, practice-based calculations produced by Bol Adviseurs, insight is provided into how Dutch and German frontier workers are treated for tax purposes: to what extent are they fiscally treated equally with their colleagues or neighbours under the new tax treaty?


Three scenarios have been produced in order to compare the differences in the net disposable income of German and Dutch frontier workers under the new tax treaty. These comparisons also consider the significance of the two concessions for frontier workers included in the protocol to the new tax treaty: the compensation scheme and the ‘Splittingverfahren’.


One of the key conclusions that can be drawn is that there is no longer full parity with neighbours and colleagues under the new treaty. Overall, ‘the same pay for the same work in the same place’, i.e. an equal net wage, is not achieved merely by bilateral tax treaties between states.[5] After all, the aim of the tax treaties is to prevent double taxation by distributing tax rights between the Contracting states. Depending on the scenario, the tax treaty proves to put the frontier workers affected at a disadvantage compared to their neighbours and colleagues. The concession in the form of the compensation scheme does not always seem to provide sufficient relief for Dutch frontier workers.

Scenario 1

Based on the calculations in scenario 1 (one earner plus partner), the compensation scheme seems to improve the position of Dutch frontier workers if they are not married to their partner. In such case, there is a marked increase in net income, while the disparity with neighbours and colleagues is lessened. For German frontier workers, the calculations suggest that the new tax treaty has no effect on the net income of married partners when only one of the partners is earning. It is worth pointing out, however, that German frontier workers generally find themselves in a better tax position than their German neighbours.

Scenario 2

Based on the calculations in scenario 2 (two earners), Dutch frontier workers generally find themselves in a worse tax position than their neighbours, more specifically in a lower income bracket. The compensation scheme therefore does not seem to succeed in ensuring sufficient parity between Dutch frontier workers and their neighbours. By contrast, Dutch frontier workers are in a better tax position than their colleagues, partly thanks to the concession under the compensation scheme. German frontier workers, by comparison, are generally in a more favourable tax position than their neighbours. This benefit is both absolute and relatively larger in the low income bracket. Moreover, German frontier workers are in a better tax position than their colleagues in some cases, largely because of the export of German child benefit to the Netherlands.

Scenario 3

The calculations under scenario 3 (sole earners) show that Dutch frontier workers are significantly worse off than their neighbours in terms of net income, even though they are entitled to the compensation scheme. However, they are in a better position than their German colleagues from an income perspective. German frontier workers in the Netherlands who are sole earners also do not enjoy any parity and take home significantly more than their German neighbours. Nevertheless, they do have parity with their Dutch colleagues.

Future research

Although achieving full parity in the future seems difficult owing to the lack of harmonized national fiscal and social security systems, we believe it is worth keeping an eye on the border effects in this dossier. A quantitative and qualitative data analysis could be carried out to establish the relationship between the treaty and cross-border labour mobility and the effect on sustainable/socio-economic development. The cross-border activities of frontier workers need to be monitored coherently for this purpose, as mentioned in last year’s cross-border impact assessment, in order to provide a representative picture of the effects of new legislation on the positions of these persons. Collecting such data coherently will help to make the analysis more representative, allowing us to subsequently evaluate cross-border mobility and, in turn, the success of the European integration project.


[1] Bundesgesetzblatt Jahrgang 2012 Teil II no. 38; Tractatenblad van het Koninkrijk der Nederlanden Jaargang 2012, no. 123.

[2] The cross-border impact assessments on the Tax Treaty Netherlands-Germany can be found on the ITEM website:


[3] For the recommendations on this point from the ITEM cross-border impact assessment 2016, see Dossier 1B: Tax Treaty Netherlands-Germany, Pensions (NL), p. 38.

[4] Please note: the specific repercussions for frontier workers and frontier regions still cannot be quantifiably measured since the treaty has only been in force for a year and a half, no coherent data on frontier work has been collected, and the beneficiaries of the treaty had the opportunity to continue enforcing the old treaty in 2016, based on the general transitional scheme (Article 33(6) of the new treaty).

[5] See also European Commission, Speech 15-6074 by the Commissioner for Employment, Social Affairs and Labour Mobility, Marianne Thyssen (Maynooth University of Ireland, Dublin), 13 November 2015. At: