For the time being, cross-border workers living in Germany do not have to pay back taxes on their Luxembourg overtime hours. The long-running dispute hinges on whether overtime worked tax-free in Luxembourg must be taxed retrospectively in Germany.
As reported by the Trier-based newspaper Trierischer Volksfreund, the issue is once again under scrutiny. A cross-border commuter from Saarland was required to pay back taxes on his Luxembourg overtime to the Merzig tax office. But experts from Germany’s Federal Fiscal Court (BFH) have cast doubt on this practice, stating that the legal situation is not entirely clear.
Following the court’s doubts, the Saarland resident does not – for now – have to pay retrospective taxes in Germany on his overtime. This may also benefit other Germany-based cross-border workers. According to the Volksfreund, tax offices are advising that they can apply for a suspension of overtime taxation for the years up to 2023. Should the Federal Fiscal Court ultimately rule against the workers, however, interest would accrue on the back taxes owed at that time.
A definitive ruling is expected by summer.
