Due to the pandemic these past two years, most employees were not allowed to cross the border and were forced to work from home. Employees could no longer work in the country where they normally physically work and therefore (potentially) triggered a tax liability in their home country. This created undesired tax consequences for many cross-border workers.
Belgium therefore concluded specific agreements with the Netherlands, Germany, France and Luxembourg. These agreements introduced a fiction of so-called ‘COVID working days’. Under certain conditions, and if the employee chooses to apply the fiction, the ‘forced home working days’ are considered to be spent in the country where the cross-border worker would have normally exercised the employment in case no travel restrictions would have been imposed.
Because of the unpredictable nature of the pandemic, these agreements were extended several times over the past two years and were most recently in force until 31 March 2022.
It was announced that the agreements with the Netherlands, France and Luxembourg will be (automatically) extended until 30 June 2022. This automatic extension was not explicitly included in the agreement with Germany. However, we can confirm that this agreement has now also been explicitly extended until 30 June 2022.
It looks like this will be the final extension, unless we would have to brace ourselves for another COVID wave mid-2022.
For many companies, the working-from-home experiment got a more permanent character as many employees continue to work from home these days and are not required to go to the office. It should be noted that if the agreements will not be extended after June 2022, the ‘normal’ rules will apply again. The country where the employee physically exercises the employment (in Belgium or abroad) will then become a decisive factor again.
It is therefore recommended to anticipate potential changes in respect to the payroll tax withholding requirements and overall tax implications, as well as the impact this will have on the social security status of your cross-border workforce.