The Netherlands has concluded mutual agreements with Belgium and Germany on how to apply the double taxation agreements for cross-border employees under the COVID-19 measures.
The mutual agreements which were concluded on 6 April 2020 with Germany and 8 May 2020 with Belgium have been extended until 30 September 2021.
Due to the travel restrictions caused by COVID-19 measures, cross-border employees may face taxation of their employment income in their state of residence because of working from home, where the taxing right normally would have been with the other state where the duties are usually performed. The mutual agreements with Belgium and Germany aim to ensure that cross-border employees have the choice to continue taxation in the other (employment) state. Days worked at home will be deemed as worked in the country where the individual would normally have worked if there had not been COVID-19 travel restrictions. This means that, despite working at home, the employment income may continue to be taxed in the state of work, provided it is actually taxed there. The employee may also choose for taxation of employment income relating to days worked from home in their country of residence. To make use of the agreement, it is necessary for the employer and employee to sign a statement wherein this is confirmed. The statement needs to be included in the payroll administration of the employer. For the sake of completeness, we would like to note that the employee(s) that wish to apply this agreement need to keep a record of this document in their own administration as well. Please note that the tax authorities in the relevant countries may impose additional administrative requirements.