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.
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 at home, where the taxing right normally would have been with the other state. The mutual agreements with Belgium and Germany aim to ensure that cross-border employees have the choice to continue taxation in the other state. Days worked at home will be considered being days 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 the employment income of working days at home in his country of residence.
To make use of the agreement, it is necessary for the employer and employee to sign a statement stating wherein this is confirmed. The statement needs to be included in the administration of the employer. For the sake of completeness, we would like to note that the employee(s) in question need to save this document in their own administration as well. Please note that the tax authorities in the country concerned may impose additional administrative requirements.
The mutual agreements have been extended until 30 April 2021.
This article was produced by CELIA member firm Loyens & Loeff.
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. "CELIA Alliance" and "CELIA" are not trading names. For more information about the CELIA Alliance click here.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.