Employers abroad: working in a home office during and after Corona

The tax agreements with Germany and Belgium provide that home office days due to the Corona crisis are taxed where they are regularly performed. If the work is normally performed entirely on site in Germany, the Dutch home office days remain taxable in Germany. This does not change the taxation of salary. On the other hand, if there were already one or two fixed home office days before Corona, these are still taxable in the country of residence.

The agreements have been in force since 11^th March 2020, and were recently extended for the last time until 1^st July 2022. These agreements can be asserted accordingly when filing an income tax return. However, it is also possible to tax the home office days in the country in which they are actually performed.

With regard to social security as well, an exception was made for home office work due to the Corona crisis. Where social security is usually shifted to the country of residence as soon as 25% or more of the working time is performed from home, this is not the case for Corona-related home office days. Just as with tax liability, the state in which the employee would normally have worked (before Corona) is also taken into account here. If a new employment relationship is entered into, taxation is governed by where the work would be performed if there were no Corona measures. The agreed social security agreements were extended until 30^th June 2022.

How will taxation be arranged when the Corona agreements expire? Thus days spent in the home office would be taxed in the country of residence. In this case, as a cross-border commuter, you will have to deal with a salary split. Depending on how your personal situation is structured, this could result in a tax advantage for you, since tax exemptions and/or lower tax rates can be claimed in both countries.

If more than 25% of the working time is performed in a home office, the social security will shift even after expiry of the Corona-related agreements. This would have considerable consequences, not only for you as a cross-border commuter, but also for your employer. In this case, your employer would have to set up payroll accounting in the employee's country of residence in order to pay the taxes and contributions due there.

Working from a home office after Corona will be a considerable challenge. For this reason, the Dutch Secretary of State for Finance is consulting with Belgium and Germany to explore the possibility of a home office agreement. This agreement states that for a certain number of home office working days, taxation for these days continues to accrue to the state in which the employment occurs. Currently these are only exploratory talks, and it is not yet known whether a home office agreement will actually be reached.

On 14 June, Minister van Gennip of the Ministry of Social Affairs and Employment indicated that it had been decided in official consultations that the Corona agreements for social security will be extended until 1 January 2023. Nothing is known (yet) about the extension of the tax agreements.