Updated OECD guidance on the impact of Covid-19 for cross border workers

In April 2020 the OECD issued guidance on the impact of Covid-19 on double taxation agreements (DTA) and their application to cross border workers. In January 2021 they updated this guidance. 

This guidance is necessary as some cross-border workers have been stranded in a country that is not their normal residence, and double taxation could arise without applying a practical approach to the interpretation of DTA. 

The guidance includes commentaries on the following:

1. Changes in residence – individuals 

It is unlikely that Covid-19 travel restrictions will affect an individuals’ treaty tax residence as a result of temporarily working in another jurisdiction.  

This could arise could arise where an individual:

  • is stranded away from their home due to holiday or a short-term business visit; or 
  • temporarily returns to their previous home country (and consequently never loses their residence in this country or regains residence in that country). 

In the first scenario it is unlikely that a person will become tax treaty resident in the country they are temporarily working in, unless they lose their domestic tax residence in their home country. 

In the second scenario, the individual will only become treaty resident in their former home jurisdiction if they both establish domestic tax residence there and create connections that are deemed to be closer to that country under tie breaker rules. For example, where an individual moves back into their parents’ house in Spain (former home country) and rents out their apartment in the UK (home country). 

2. Days of presence test in the employment article of DTAs 

Where an individual is resident in one country, exercises their employment in another country, and is:- 

  • prevented from leaving the other country due to COVID9 restrictions; and 
  • would have left that country and qualified for exemption from tax there, 

some jurisdictions will discount these days for the purposes of the 183-day test. 

This is only likely to apply where the employee is prevented from leaving the country due to sickness, quarantine, and travel bans. However, this may not cover the situation where an individual does not leave a country due to a government recommendation to avoid unnecessary travel or where there is an element of choice involved. 


A change in where the employee works due to COVID19 may result in a change in the allocation of taxation rights between two countries.  

For example, the country where the employment was formerly exercised could lose its taxation rights, and their employer would need to find a way to suspend its withholding obligations in that country. 

4.Cross border workers 

A change in the location where an employee works may impact the application of special provisions in DTA between neighbouring countries that deal with cross border workers. 

For example, in the case of French residents who work in Germany, the employee’s income will not be taxable in their home country (France) unless the number of days spent working outside Germany exceeds a maximum number of days each year. 

In this situation the pandemic is treated as a force majeure and the additional days spent working in France will be discounted from the calculation of threshold days worked outside Germany. 

5.Wage subsidies to employers 

These payments should be attributed to the jurisdiction that the employee worked in pre pandemic. 

“Reference is always required to the relevant domestic rules and to agreements between jurisdictions.  Please get in touch with our global mobility team for further advice in this area.”