What does this mean for cross-border commuters?
In terms of taxation?
As far as taxation is concerned, the rule is that frontier workers’ income is taxed in the country in which they work (i.e. the Grand Duchy of Luxembourg).
By way of exception, for days worked by the employee outside the Grand Duchy of Luxembourg (either in the State of residence or in any other State), the income of the cross-border employee will remain taxable in the Grand Duchy of Luxembourg provided that the following annual thresholds are met, depending on the employee’s State of residence:
- in France: 29 days maximum
- in Belgium: 24 days maximum
- in Germany: maximum 19 days
If the above thresholds are exceeded, the employee’s income for days worked outside the Grand Duchy of Luxembourg is taxed in the employee’s state of residence.
Since teleworking means that the cross-border employee works in his or her country of residence, this would mean that the above-mentioned maximum thresholds would be reached much more quickly, especially given the duration of the current crisis, resulting in the employee’s income being taxed in his or her country of residence for days worked outside the Grand Duchy of Luxembourg.
To remedy this situation, the Grand Duchy of Luxembourg has fortunately signed a number of agreements with its neighboring countries, Belgium, France and Germany.
Thus, for Belgium and France, teleworking carried out from March 14, 2020 in the context of the fight against COVID-19 will be excluded from the determination of the aforementioned thresholds until further notice.
The same applies to Germany, but from March 11, 2020.
Social security?
Teleworking also has repercussions in terms of the cross-border employee’s affiliation to the national social security system, since in this case the employee is required to work in his or her country of residence and no longer in the Grand Duchy of Luxembourg, i.e. in two European Union member states as part of the employment relationship.
The principle in this case is that affiliation to the Luxembourg social security scheme is maintained, provided that the employee’s working time/income generated in his or her State of residence does not exceed 25% of the total working time/income.
In the same way as in tax matters, the current trend towards teleworking means that the above-mentioned threshold is reached more quickly, requiring the employer to affiliate the employee to the social security scheme of the employee’s country of residence.
To remedy this situation, discussions are currently underway at European Union level.
However, the competent national authorities in neighboring countries (Belgium, France and Germany) have already indicated that teleworking in the current exceptional context of the fight against COVID-19 will not be taken into account in determining the aforementioned threshold, and will therefore have no effect on the employee’s affiliation to the national social security scheme, which will remain unchanged.
Cumulation with other measures?
The employee, who has to work from home, is therefore not available to look after a child or another member of the household at home.
In this way, another member of the household (or the other parent) can benefit from “extraordinary” family leave or family support leave specifically set up to combat COVID-19.
In addition, teleworking can also be combined with short-time working, which the employer would benefit from in the current crisis, in order to ensure that the company is able to operate at full capacity. The employee’s remuneration will then be shared between the employer (for hours teleworked) and the State (for hours “unemployed”).