Teleworking across borders – Social Security extends transition period, tax authorities do not

In our previously published article you could read about the impact that ‘teleworking across borders’ can have on social security and taxation. Fortunately, the government introduced certain forbearances.

The National Social Security Office allowed periods of teleworking on the Belgian territory to be disregarded when determining the applicable social security system. For its part, the tax authorities concluded agreements with neighbouring countries: the Netherlands, France, Germany and Luxembourg not to take teleworking periods into account for tax purposes either due to the Covid pandemic.

Transition period

Although these measures expired on 30 June 2022, the Belgian social security still granted a transitional period until 31 December 2022 for cross-border workers who telework.

This transitional period entails that the telework of cross-border workers in their country of residence does not imply a change in the applicable social security system. This applies, however, only to social security and not to the Limosa notification, which became mandatory again from 1 July 2022 for teleworkers falling under the scope of the notification requirement.

Extension

The social security authorities have now announced that the transitional period will be extended to 30 June 2023. This additional six-month period allows for the relevant administrations, employers and cross-border workers to get organised. In addition, this period gives the social security authorities the opportunity to further evaluate the specific situation of teleworking and possibly work out structural measures. For now, it is unclear which regulation will apply from 1 July 2023.

Tax authorities do not extend

On the tax front, the double taxation treaties have regained full effect from 1 July 2022, as the agreements with Belgium’s neighbouring countries were not extended by the tax authorities, nor has a transitional period been provided for. This means that working from home across borders again has an impact on the employee’s tax situation.

Double taxation treaties adhere to the principle that tax is due in the country where the employee is physically present to carry out their work. However, employees working across borders may also be taxable in another country, which is referred to as a ‘salary split’. The effective presence of the employee in a given country will then be the decisive factor.

Do not hesitate to contact us if you would like more information on teleworking abroad or in order to set up a correct salary split for your employees.