The French government is preparing legislation to amend taxes and facilitate working from home for cross-border employees in Luxembourg.

After recently raising the working from home tax threshold from 29 to 34 days per year, the French government is once again taking steps to improve conditions for cross-border workers. The 2023 budget includes a draft law - yet to be approved by parliament - which could simplify the withholding tax for Luxembourg-based companies employing French cross-border workers.
As it stands, employers who work from home over the agreed tax threshold must declare the days at additional cost, in an often-times tedious process. The new bill states that "compliance with tax obligations for a fraction of their employee's activity carried out in France can then constitute an administrative obstacle, particularly in the context of the development of remote working". 

Isabelle Rauch, MP for the Moselle region, said the process also carried the risk of "legal instability" in the event of errors.

The French government therefore proposes to remove this obstacle, in order to encourage Luxembourgish businesses to allow their employees in France to work from home more often.

More teleworking, fewer taxes

If article 3 of the draft bill is passed, then Luxembourg-based companies will only have to submit annual remuneration amounts which are taxable in France in accordance with French tax laws.
France will then take a preliminary levy from the employee, determined in accordance with their last declared income.

Rauch said this was good news for employees resident in France who would be able to work from home more while paying less tax, as French income tax is lower than Luxembourg in many cases.

Pending the potential creation of an EU-wide cross-border worker status, this change will allow employees to work from home up to the European social threshold of 25%, or one day per week, provided the employer is in agreement.