Luxembourg and Belgium allow more teleworking days

On 31 August 2021, Luxembourg and Belgium have signed an agreementto increase the number of days cross-border workers can work from home without losing their taxable status in the other country.

The double tax treaty between Belgium and Luxembourg

Employees who are tax resident of Belgium and who work in Luxembourg for a Luxembourg employer, are, in principle, liable to tax in Luxembourg on the employment income but only in respect of the working days spent in Luxembourg. If they work from home or if they work in another country (e.g. on a business trip), their income for these working days outside Luxembourg are normally liable to tax in Belgium and not in Luxembourg.

A first tolerance of 24 days

A mutual agreement signed between Belgium and Luxembourg on 5 December 2017 introduced an exception. Since 1 January 2015, Belgian residents who are working for a Luxembourg employer in Luxembourg, are allowed to work outside Luxembourg for a maximum of 24 days per calendar year, where they are deemed to have worked physically in Luxembourg (and vice versa).
This is a tolerance for working days outside Luxembourg (at home in Belgium or elsewhere) allowing Luxembourg to tax the employment income for these days (with a maximum of 24 working days).

A new tolerance of 34 days in 2022

Within the context of the COVID-19 pandemic, there had been tolerances since March 2020 allowing workers working from home while still being taxed in the work state. These have been extended until the end of September 2021.

The agreement signed on 31 August will extend the “24-day rule” that will become a “34-day rule” from 2022. According to the Luxembourg Finance Minister, the “34-day rule” will stay in place for 10 years. The increased flexibility will improve the quality of life for workers and reduce the number of passengers on transport infrastructures.