Improved tax flexibility for Belgian / Luxembourg cross-border workers
Due to the Covid-19 pandemic, many Belgian tax residents working in Luxembourg were no longer able to travel since remote working/home working was recommended or mandatory, based on governmental rules. As such, ‘the 24-day rule’ (whereby taxation of days working in Belgium are treated as fully taxable in Luxembourg and not in Belgium, provided the 24-day limit is not exceeded) was often exceeded, and consequently, this income would be taxable in Belgium.
As a result, both the Belgian and Luxembourg governments considered the Covid-19 pandemic as a ‘force majeure’. Consequently, they agreed that, up until 31 December 2021, working days spent in the home country do not need to be considered as working from home, but as working from Belgium/Luxembourg, depending on the tax residency status of the individual.
Based on article 15 of the double tax treaty concluded between Belgium and Luxembourg (DTT BE-LUX), the professional income of an employee is, in principle, taxable in the country where the professional activity of the employee is exercised. For Belgian cross-border workers, this means that their remuneration is in principle taxable in Luxembourg. An exception to this rule is where a Belgian employee stays in Luxembourg for a maximum of 183 days during a 12 month period, their remuneration is paid by or on behalf of an employer that is not established in Luxembourg, and the remuneration is not borne by a permanent establishment or a fixed base which the employer holds in Luxembourg. In such cases, Belgium remains competent to levy taxes on that individual’s remuneration.
As of 2015, an administrative tolerance was introduced. This tolerance enables an individual who is a tax resident in Belgium and works in Luxembourg to spend a maximum of 24 working days outside Luxemburg in order to be still fully taxable in Luxemburg. Many Belgian residents used this tolerance since it is more attractive to be taxed in Luxembourg than in Belgium. Note that this tolerance also applies in the other direction, i.e. tax residents in Luxembourg working in Belgium.
Given the fact that remote working/home working has become part of our professional lives, the Belgian and Luxembourg governments recently agreed that, as of 2022, ‘the 24-day rule’ will be stretched to 34 days. As such, individuals will be able to spend up to 34 working days outside the country they usually perform their professional activities and still remain fully taxable in the country where the work is performed.
It is important to note is that if the threshold of 34 working days is exceeded, article 15 of the double tax treaty needs to be applied. Going forward, it is really important to keep track of all days spent in Belgium, Luxembourg, and abroad.
The FIG regime: changes to the taxation of non-domiciled individuals in the UK
What is the issue? From 6 April 2025, the remittance basis of taxation for UK resident non-domiciled individuals will be abolished and will be replaced by a simplified Foreign Income and Gains (FIG) regime. There will also be changes to the way inheritance tax operates, so that it will be based on a test of residence […]
Moving to Mexico: global mobility tax considerations
Since 2020, as a result of the COVID-19 pandemic, Mexico has become an attractive location for certain foreigners to work remotely. However, employers have to consider numerous tax and immigration factors for their employees working remotely from Mexico. According to Mexican legislation, an expatriate is a person who is legally authorised to carry out a […]
Expert tax relief in Sweden to be more advantageous
The Government of Sweden has submitted a bill extending the period for granting expert tax relief from five to seven years. If the Government bill is approved by Parliament, the extension will be in effect for eligible employees commencing work on 1 April 2023 or later. This article explains how the tax relief works and […]
Significant changes to Dutch expat facility
On 19 September 2023, Dutch Parliament voted for several amendments to the 30%-ruling (exempting 30% of the pay of a foreign employee working in the Netherlands) from 1 January 2024. Upon the likely enactment, this will have an impact on the tax position of existing and future expats working in the Netherlands, reducing or limiting […]
Spanish Supreme Court allows tax benefit to company directors
A Spanish Supreme Court Ruling on 20 June 2022 effectively reverses the decision by the Spanish tax authorities to remove the tax exemption for company directors for works carried out abroad(1). In its ruling, the Supreme Court considers that directors and board members can apply the exemption, provided that requirements set out in Article 7.p) […]
The impact of digital assets and cryptocurrencies decentralised finance on taxation in various jurisdictions
Digital assets and cryptocurrencies continue to evolve by offering new services and products such as Decentralized Finance (DeFi) and non-fungible tokens (“NFTs”), but is tax legislation also keeping up to date with the ever-changing world of digital assets and cryptocurrencies?
India: Most Favoured Nation Clause causes controversy
India has signed double tax avoidance agreement (DTAA) treaties with several countries and entered into a protocol, inter-alia, containing the Most Favoured Nation (MFN) clause with 13 countries including France, Belgium, Spain, Sweden Switzerland, and the Netherlands. The MFN clause usually states that if, after date of entry into force of the tax treaty between […]
New tax rules in Luxembourg impacting cross-border workers and PEPPs
Guidelines on the taxation of cross-border workers during the Covid-19 pandemic and an update on PEPP as defined in the latest budget laws in Luxembourg.
Changes to Belgian special tax status expected in 2022
The Belgian government has approved a draft bill in which changes for the new Belgian special tax status for foreign executives and specialists are embedded. The limited duration of the tax benefits, the minimal remuneration threshold, and the ‘30%-rule’ are the most profound changes. The changes will be effective from January 1, 2022. As a […]
Greece’s beneficial tax regime for foreign residents
In December 2020, Greece introduced tax incentives to attract foreign tax residents. Specifically, the provisions of Article 5C of the Greek Income Tax Code (ITC), which came into force on 1 January 2021, stipulate that foreign employees or foreign freelancers becoming Greek tax residents can enjoy a 50% tax exemption from income derived in Greece […]
Impact of the UK’s new Health and Social Care Levy Bill on expatriates
In response to the unprecedented spending on public services during the recent pandemic, the UK government has introduced a 1.25% health and social care levy applicable to every person liable to National Insurance Contributions (NIC), including self-employed individuals and internationally mobile employees (IMEs). Where employees are concerned, employers will also be required to pay the […]
Recent Tribunal ruling on the taxation of ESOPs (Employee Stock Option Plans) in India
In accordance with OECD guidelines, the taxability of ESOP in India depends on where employment is exercised and the period of service for which ESOP has been granted.
Tax aspects of opening a business hub in Asia
The Asian Development Bank has forecast that developing Asia’s growth is forecast to rebound to 7.3% in 2021 and 5.3% in 2022. This compares to 4.2% and 4.4% respectively for Europe (see here) and 6.9% and 3.6% for the US (see here). Businesses already with a footprint in the Asian region will be gearing up their operations to deal with the region’s expected […]
Migrants and refugees have employment rights and obligations in Uruguay
As Covid restrictions begin to lift there will inevitably be increased movement of workers across borders. This brings back into focus a range of global mobility and tax considerations for businesses and individuals. Examples include work permits, visas, payroll and social security amongst other issues. Below is a snapshot of some pints concerning Uruguay to […]
Challenges of global mobility – focus on Mauritius
Global mobility is a significant advantage in a world where all countries are connected by monetary flow, means of transports and digital communication. A comprehensive global mobility strategy takes time, teamwork, and careful thought. The main challenges faced when designing a global mobility program are payroll, tax issues and laws, and compensation among others. It […]
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 […]
Why Czech Republic’s tax system is attractive for expatriate employees?
Tax reform continues to come in waves across the globe. One common theme of many reforms is tax breaks for low to mid wage earners and surprising tax hikes for high wage earners. This trend seems to be consistent with the latest out of the Czech Republic. New changes to the Czech tax law effective […]
Impact of Covid-19 on personal income tax and permanent establishments in Singapore (Part 2)
The Covid-19 pandemic has resulted in unprecedented disruptions across multiple countries and economies in the world. In addition to adversely affecting the world economy, the restrictions placed on travel could have personal income tax implications for individuals and permanent establishment risks for businesses. This article provides an insight into the tax considerations in respect of the current crises with focus on the Singaporean personal income tax regime and the possible creation of permanent establishment risk. Permanent Establishment considerations […]
Impact of Covid-19 on personal income tax and permanent establishments in Singapore (Part 1)
The Covid-19 pandemic has resulted in unprecedented disruptions across multiple countries and economies in the world. In addition to adversely affecting the world economy, the restrictions placed on travel could have personal income tax implications for individuals and permanent establishment risks for businesses. This article provides an insight into the tax considerations in respect of the current crises with a focus on the Singaporean personal income tax regime and the possible creation of permanent establishment risk. Taxation […]
Covid-19 and the impact on taxation of individuals and permanent establishments in Nigeria
world. In addition to adversely affecting the world economy, the restrictions placed on travel could have personal income tax implications for individuals and permanent establishment risks for businesses.
EU-UK social security protocol and its implications
On 24 December 2020, a draft protocol on social security co-ordination for EU-UK cross border working arrangements that start from 1 January 2021 was published. The draft protocol contained an article covering detached workers, i.e. employees who normally work in one EU member state/the UK who are sent to work in the UK/an EU member […]
Remote Worker – “necessity” or “choice”?
During the first wave of Covid-19 back in the spring of 2020, many employers found themselves dealing with the issue of “remote workers” in significant volumes, for the first time. When “working from home”, means working from home in another part of the city or the country then the issues are more likely to be […]
Welcome (bienvenidos, willkommen, karibu, bienvenue) to a world of tax incentives
The pandemic has led to many people choosing to relocate. Many are leaving densely populated cities to work remotely to where they feel are more desirable locations for themselves and family. Others are holding steadfast to their crowded city dwellings. Either way, geographies are challenged to retain (or welcome) existing residents and newcomers. Many are […]
The new year brings new social security challenges post- Brexit
What is the issue? With Brexit talks still ongoing, employers should be planning for the impact of a hard Brexit on social security coverage and benefit provision for their employees who travel between the UK and EU (including EEA & EFTA countries and Switzerland) for work. HMRC’s October employer bulletin provided a welcome update on […]