There is a Recommendation from the Benelux Parliament, a Protocol with Belgium and a Treaty amendment on the way with Germany. What about the teleworking frontier worker?
The proportion of teleworking among employed people has been increasing for years. With COVID-19, a lasting impetus has been to this. However, teleworking across national borders can have social security and tax implications. The Cross-Border Impact Assessment 2021 explored and analysed these social security and tax implications. “Applying these European social-security rules and the rules from current tax treaties to working from home can have negative or, occasionally, positive effects for cross-border workers and their employers,” Marjon Weerepas (professor of Tax Aspects of Cross-Border Work at UM and affiliated to ITEM) indicated. “Either way, if nothing changes, the situation for cross-border workers will become even more complex than it already is. One solution may be to increase the working-from-home percentage from 25% to 40%.”
Since the Cross-Border Impact Assessment, several developments have occurred to move towards the formulated opinion. An important development was the 2023 Social Security Framework Agreement, which allows cross-border teleworking up to 50% (max 49.9%) without social security consequences. 22 EU member states have signed this Framework Agreement, including the Benelux countries the Netherlands, Belgium and Luxembourg and neighbouring Germany. To benefit from the Framework Agreement, employers and employees must apply to their social security authority.
What about taxation?
The tax reality in many cross-border cases even different. These arrangements are based on bilateral tax treaties between countries. Research by ITEM, commissioned by OPNL’s science office, on different tax regimes for teleworking cross-border workers in the EU has shown different homeworking tax regimes. More or less, these can be summarised to three tax options: (1) a de minimis regime, where limited cross-border homeworking is fiscally facilitated (‘tolerance threshold’); (2) border commuter regime , where a border commuter and/or a ‘border region’ is defined; (3) synchronisation of a homeworking tax threshold with the European Framework Agreement. The last option, synchronisation between taxation and social security, is the starting point for ITEM in this regard.
Latest developments: de minimis arrangements
During the plenary session of 21 and 22 March 2025, the Benelux Parliament unanimously adopted the recommendation on cross-border telework. The Benelux Parliament also recommends synchronising taxation with social security as much as possible, in terms of definitions but ideally also for a home-working threshold regulation. This also applies to the abstract notion of a tax “permanent establishment”, where the home office is considered a tax fictitious place of business of the employer. In 2023, Belgium and the Netherlands agreed that a permanent establishment in principle does not exist if the lines of the Framework Agreement are followed (up to 50% working from home). Germany has unilaterally set out agreements, the starting point being that the employee’s home office will generally not be a permanent establishment for tax purposes.
But things don’t want to move that fast on the home-working threshold regulation. This week, the Netherlands and Germany announced they had reached an agreement. Home working by cross-border workers will be tax-facilitated up to a maximum of 34 days a year. This is a de minimis rule, which fits in with the likes of Belgium-Luxembourg, Germany-Luxembourg and France-Luxembourg. Obviously, it is not yet a big deal. After all, synchronisation with social security (which allows 25% or 49% cross-border working from home without consequences) is still a long way off. “But I am glad to see that a letter of intent has been signed, agreeing to continue discussions on a more ambitious homeworking regulation,” said Sander Kramer (assistant professor of tax law and affiliated to ITEM). “We have also seen such a review clause in the France-Luxembourg Tax Treaty. We see that as an example for the long-running negotiations between the Netherlands, Belgium and Germany.” A window has also been opened to provide more clarity between Germany and the Netherlands on permanent establishment. That is where the agreements between Belgium and the Netherlands provide a clear blueprint.
ITEM remains committed to this issue, looking not only technically at tax revenues but also at the people and companies affected. It is obvious: a good homeworking scheme is an important prerequisite for the Euroregional labour market and economy. In this light, this should be seen as a first step, which should be followed up (quickly).