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Monday, 10 July 2023

Cross-border telework in Luxembourg: ongoing developments

Maxime Grosjean

Maxime Grosjean

Senior Associate
Luxembourg
Emma Fontenaud

Emma Fontenaud

Associate
Luxembourg

Under the EU social security Framework Agreement, Luxembourg cross-border workers may telework more often from their state of residence without impacting their applicable social security legislation (provided telework represents less than 50% of their total working time).

 
  • The EU social security Framework Agreement aiming to increase the social security “threshold” for cross-border telework to 49% entered in force on the 1st of July 2023.
  • As of the present date, eighteen countries have signed the agreement and among other Luxembourg, Belgium, Germany, and most recently France.
  • Several points of attention however remain and notably:
    • The application of the regime is subject to conditions and prior declaration with the social security authorities;
    • For income tax purposes, different rules apply and teleworking may result in a taxation of the corresponding employment income in the country of residence, when the applicable tax threshold is exceeded:
      • Luxembourg - Belgium: 34 days;
      • Luxembourg - France: 29 days (a 34 days threshold is expected to eventually apply for 2023).
      • Luxembourg - Germany: 19 days (an agreement providing for 34 days as from 2024 was recently signed).
    • Tolerances for teleworking do not prevent the employee (inadvertently) creating a permanent establishment for the employer in the state of residence, with all due consequences.
 

For any questions, please contact your trusted advisor at Tiberghien Luxembourg or contact one of the authors of this publication.

Maxime Grosjean

Maxime Grosjean

Senior Associate
Luxembourg
Emma Fontenaud

Emma Fontenaud

Associate
Luxembourg
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