The Ministry of Finance reports that the tax treaty with Germany is amended with regard to cross-border projects.
Border operations
This applies to employees who live in the Netherlands and work in Germany, or to people who live in Germany and work in the Netherlands. The tax treaty between the Netherlands and Germany assigns the right to levy tax to the country where the work is physically carried out. The wages of cross-border workers who work from home may be taxed partly in their country of residence and partly in their country of employment.
34 days
The amendment to the tax treaty with Germany means that cross-border workers may work from home for up to 34 days a year without the portion of their salary attributable to this work being taxed in their country of residence. A day is considered a ‘work-from-home day’ if more than 30 minutes of work is carried out at home on that day.
It is not yet clear when the new regulations will come into force. First, the Council of State must give its opinion on the proposal, and then Parliament must approve the amendment. The same process must be followed in Germany.
This amendment does not provide a solution for cross-border workers who regularly work from home for one or two days. The Netherlands and Germany have expressed their intention to continue discussions on a working-from-home scheme that would also resolve this situation. Taxation in both countries leads to uncertainty for employees regarding their net income and to additional administrative burdens. Both countries consider this undesirable.
Social security
The treaty relates solely to the levying of taxes. For social security matters, a European Regulation must be consulted. Within that framework, the Netherlands and Germany have concluded a framework agreement on the issue of cross-border workers. We describe how this works in our article Cross-border teleworking.