Cross-border workers working from home - International COVID-19 measures agreed between Luxembourg and Belgium

In line with the recommendations of the OECD Secretariat, Belgium and Luxembourg have formally concluded an agreement on 19 May (the “Agreement”) to mitigate certain tax consequences of COVID-19 measures implemented by governments. Namely, the Agreement addresses the potential adverse tax consequences that may arise while complying with advice issued by the Luxembourg and Belgian governments to implement work-from-home arrangements, to the extent possible, for all workers.

The Agreement has been reached and executed on the basis of Article 25.3 of the Luxembourg-Belgium Double Tax Treaty and its Final Protocol, signed on 19.09.1970, as amended on 11.12.2002 and 16.07.2009 (the “DTT”).

According to the Agreement, working days for which remuneration is received and during which employment is carried while at home under a work-from-home arrangement may be considered, for the purposes of Section 15, Para. 1 of the DTT, to have been carried out in the contracting state in which the border-worker is employed, provided the work-from-home arrangement was implemented as a response to, and in compliance with, measures taken to address the COVID-19 pandemic by the Belgian or Luxembourg Governments.

This agreement is applicable for the period from March 11, 2020 to June 30, 2020. From 1 July 2020, the Agreement may be extended for an additional one-month period if the two competent authorities agree so in writing at least one week before the end of the initial term or of each subsequent one-month extension.