Imposed by the lockdown, teleworking has made an unprecedented breakthrough in the corporate world due to the covid-19 crisis. While most companies have resumed in-person work, some are continuing the experiment due to the difficult health measures being applied at the office or for the comfort of their employees. In the spring, the tax relief granted by France, Belgium and Germany was extended to 31 August to accompany the easing of lockdown. But an extension will still be necessary with regards to the evolution of the pandemic in neighbouring countries, as the grand duchy managed to curb its own rise in infections in early July.

As such, the recently finalised agreement between France and Switzerland on the social element of teleworking suggests an extension of the exceptional measures taken in the name of the fight against the spread of covid-19. It is indeed the second obstacle of teleworking after the tax component: social charges are a priori due to the tax authorities of the country in which the employee's professional activity is carried out, from 25% of his working time - and his affiliation is also amended, which would mean for cross-border workers the loss of Luxembourg family allowances and the suspension of their contribution to the general pension scheme.

Agreement in principal between Luxembourg and Belgium

This social aspect has been dealt with, but the tax aspect remains to be settled since, as of 1 September, the system of thresholds should again apply from which cross-border workers have their income taxed by their country of residence (29 days for French cross-border workers, 24 for Belgians, 19 for Germans). The grand duchy is therefore dependent on the goodwill of its neighbours.

Discussions seem to be going well on the Belgian side, as per the answer given to Belgian federal deputy Josy Arens by the finance minister: “Our administration has contacted the Luxembourg administration regarding the extension of the amicable agreement. It was agreed to extend this agreement until the end of the year, so until 31 December 2020. The extension of the agreement will be signed over the next few days."

The Luxembourg ministry of finance indicates that it has contacted its counterparts and awaited their responses.

This article was originally published in French on Paperjam.lu and has been translated and edited for Delano.