The new tax treaty preventing double taxation between France and Luxembourg is now ready to enter into effect, around a year after being negotiated in Paris. On Tuesday 2 July, MPs in the Chamber of Deputies passed the text. 52 MPs voted in favour, six voted against the legislation, and two abstained.
One of the major changes brought by the treaty concerns raising the remote work threshold for cross-border workings residing in France. The threshold will now rise to 29 days of remote working per year, whilst employees legally remain considered employees in Luxembourg. Consequently, employees will continue to pay income tax in Luxembourg.
The new agreement puts French cross-border workers in the best position concerning remote working, as their German and Belgian counterparts only have the right to a respective 19 and 24 days of remote working per year.
A further change stipulated in the convention concerns the way in which French cross-border workers will be taxed: they will no longer be exempt and instead, their income will be imputed in France.
This point caused concern amongst cross-border workers, especially after a tax expert claimed many workers would have to pay the tax different in France. However, the Grand Est cross-border worker association confirmed to our colleagues at RTL 5Minutes that the difference will be either limited or non-existent due to Luxembourg's more restrictive taxation conditions. Nevertheless, those affected still await that France clarifies its interpretation of the legislation.
The convention will enter into effect once Luxembourg notifies France of its vote.
