The agreement was recently extended to allow cross-border workers to continue working from home until the end of the year, but the news has not been welcomed by all. The Meurthe-et-Moselle senator deplored the fiscal losses for France which would be caused by the extension.
Although it is certainly a relief for cross-border workers, Jacquin said the agreement had few advantages for France, instead giving money back to Luxembourg rather than compensating the country of residence.
The senator is campaigning for the establishment of tax compensation for Luxembourg in exchange for an increase in the number of days of working from home. In July he said he was in favour of increasing tax thresholds on the condition that the tax agreement between Luxembourg and France allowed for French compensation.
The agreement in question is valid until 31 December 2020 and allows cross-border workers to carry out their roles from home without being taxed in France or undergoing social security changes. The current text, validated by French and Luxembourgish authorities, goes well beyond what was negotiated by the two governments in 2018.
Prior to the pandemic, French border workers who spent more than 29 days a year working outside of the Grand Duchy would be taxed in their country of residence, and switched to the French social security system if they worked more than 25% of their annual working time (around 50 days) outside of Luxembourg. Currently, both these rules are suspended due to the health crisis.
Jacquin said he was glad cross-border workers could work from home during the global crisis, but said he regretted the loss of income tax to France in the process, particularly for certain income brackets. Although French negotiators tabled the suggestion, it was not adopted as part of the final agreement.
The senator said he hoped the issue of teleworking and the taxation of cross-border commuters would be addressed at the Franco-Luxembourg intergovernmental conference scheduled in the autumn.
