A French proposal to raise the tax threshold for cross-border workers and expand teleworking is now on the table, pending Luxembourg's response to compensation requests.

France has sent Luxembourg a memo proposing potential improvements to teleworking opportunities for cross-border workers, in exchange for "compensation" to be financed by Luxembourg.

In response to a parliamentary question from MP Sven Clement of the Pirate Party, Luxembourg's Minister of Finance, Gilles Roth, confirmed that he had received the French proposal. "A technical note was sent to my departments last April," Roth said.

The French proposal suggests raising the tax threshold for cross-border workers to 40%, allowing them to telework two days a week, up from the current limit of 34 days per year. However, this adjustment would be contingent on Luxembourg providing "compensation," the finance minister explained.

Roth noted that discussions on this issue can only begin once France ratifies the revised double taxation treaty, which must be approved by the French parliament. Signed in 2018 and amended in November 2022, the treaty is set to increase taxes on many cross-border workers starting in 2025, based on income earned in 2024.

Read also: Tax, unemployment, teleworking, traffic: Challenges mount for Luxembourg's cross-border workers 

"It is crucial for us to finalise this procedure before engaging in more detailed discussions about the future of this bilateral agreement," Roth said.

In addition to teleworking and potential compensation, the two countries are also considering negotiations over the reimbursement of unemployment benefits for French cross-border workers. These benefits, which are determined by European legislation, are financially favourable to Luxembourg. French Senator Véronique Guillotin believes that France is in a strong position to address this issue.