In order to restrain the spread of the Covid-19 virus, various EU Member States introduced social distancing measures leading to increased teleworking.
In cross border situations, where the applicable social security system and applicable taxes depend on the place where the professional activities are actually carried out, this telework could lead to a change in applicable social security legislation and taxes.
Until further notice, the normal rules remained in force.
There were only two exceptions that applied as from March 14, 2020:
For frontier workers in Belgium and Luxembourg who stay taxable in their work state if their activities outside the work state do not exceed 24 days, the telework following the corona crisis in their residence state will not be taken into account to calculate the 24 days limit.
For French frontier workers in Belgium who stay taxable in France provided their activities outside the Belgian border region do not exceed 30 days, the telework following the corona crisis in their residence state will not be taken into account to calculate the 30 days limit.
The authorities of both countries consider the actual corona crisis as a case of ‘force majeure’ as mentioned in the respective double tax treaties.
In all other cross border situations, the day count as foreseen in the double tax treaties stayed applicable. This is the case in case of split taxation (employee working for one employer in different countries) or secondment. Therefore the increased telework can lead to a shift in the applicable taxes.
Agreement between Belgium and The Netherlands and between Belgium and Germany
In the meantime Belgium has reached an agreement with the Netherlands and with Germany whereby the days of home work that were spent in the state of residence, solely because of the Covid-19 measures, are deemed to have been spent in the state where the employee would have spent these days without the Covid-19 measures.
To this end, it is required that the necessary documentation is kept, e.g. a written confirmation from the employer stating which part of the home working days were spent at home solely because of the Covid-19 measures. Furthermore, this can only be applied provided the salaries are actually taxed in the state where the activities would have been carried out without the Covid-19 measures.
In principle, this means that the originally set ratio (ratio of days worked in the work state / total number of days worked) can be maintained.
The agreement with the Netherlands also states that the same applies when the employee remains at home without working, but with the employer continuing to pay his salary. This is not included in the agreement with Germany.
Staying home without working with the right to a Belgian temporary unemployment allowance for Dutch residents
Further residents of the Netherlands who work in Belgium and who are entitled to Belgian temporary unemployment benefits as a result of the Covid-19 measures will be taxable in the state where the employment actually took place. The usual working pattern before the Covid-19 crisis is therefore important here. In other words, this means that these benefits will be taxable in Belgium.
The above arrangement applies as from March 11, 2020 to May 31, 2020. This period can each time be extended by one month if both countries agree timely in writing.
Also in the area of social security decisions have been taken. To remedy a possible switch in the applicable social security system, the Belgian government decided that the temporary telework in the home country following the Covid-19 crisis, will not be taken into account to determine which social security system applies. This measure entered into force on March 13, 2020.
What you should do as HR professional?
To manage the situation:
Monitor the number of days spent in Belgium and abroad by your employees and compare with the planned situation.
Document, especially for The Netherlands and Germany, the which part of the home working days were spent at home solely because of the Covid-19 measures.
Verify whether a deviation triggers a shift in social security and/or tax system.
If necessary adjust the payroll accordingly during the year.