Agreement between Belgium and Luxembourg updated
The Belgian and Luxembourg authorities have recently announced to further relax the so-called ‘24-day rule’. The new agreement will apply as from 1 January 2022 (tax year 2023).
In general, Belgian tax residents who work in Luxembourg for a Luxembourg employer are taxable there on the salary earned for the working days spent in Luxembourg. This is explicitly stipulated in the double taxation agreement (DTA) between these countries. For the days worked outside Luxembourg, e.g. from home in Belgium or on business trips abroad, the salary is in principle only taxable in Belgium (country of residence).
However, an exception to this rule is provided for in a mutual agreement between both countries. Since 2015, Belgian tax residents who work for a Luxembourg employer in Luxembourg are allowed to work outside the country for a maximum of 24 days per calendar year. Those days are deemed to have been performed physically in Luxembourg.
Due to this tolerance, Luxembourg may tax the corresponding salary, preventing a shift in taxing rights to Belgium. The same rule applies mutatis mutandis to Luxembourg tax residents who work in Belgium for a Belgian employer and who spent several working days per year outside Belgium.
To further facilitate teleworking for cross-border workers, the authorities have now agreed that the 24-day rule will be further relaxed. As from 2022, the current maximum of 24 days is increased to 34 days per calendar year. Effectively, employees will have 10 extra working days per year to work from home or abroad.
It should be noted that this agreement does not take into account the temporary COVID-19 provisions concluded between the Luxembourg and Belgian tax authorities, which normally stays in effect until 30 September 2021.