Made popular by the coronavirus pandemic, teleworking has become essential for workplaces in 2022. But how does it affect cross-border workers and the existing tax agreements with Luxembourg's neighbours?

For many roles, working from home has become the new normal within the world of work, particularly since the onset of Covid-19. However, for cross-border workers, telework still has certain constraints, unless otherwise negotiated with their employer.

Luxembourg has temporary agreements in place with Germany, Belgium and France regarding telework until 30 June 2022, in lieu of the usual constraints, meaning there is currently no limit on the number of days worked from home.

Usually, two rules are taken into account: the existing tax agreement with the relevant neighbouring country, and the European rule of 25%.

Tax agreements

As it stands, cross-border workers living in Germany are permitted to work from home up to 19 days per year, while maintaining Luxembourg social security and taxation.

Following an agreement struck in summer 2021, Belgian cross-border workers can now work from home up to 34 days per year.

French cross-border workers will also be entitled to 34 days of teleworking, up from 29 days previously, once a revised tax agreement is signed between both countries in spring 2022.

European 25% rule

The European regulation stipulates that working from home abroad should not exceed 25% of an employee's annual working time. This represents around 50 days annually. Beyond the 25% threshold, the employee concerned would no longer be affiliated in Luxembourg but in their country of residence. As they would therefore no longer be contributing to Luxembourg (social security, pension) they would lose certain benefits such as family allowance.

This also concerns the employer as they would also need to register in the country of residence, which may incur costs.