Belgium has now extended its tax agreements with all neighbouring countries (France, Germany, The Netherlands and Luxembourg) so that any employee who is currently on a Belgian payroll but working from home due to Corona in any of these countries will continue to pay tax in Belgium as if he or she was actually in Belgium.
This agreement applies until 30 June 2021.
Belgium has concluded a double tax treaty with many countries. On this basis, an employee’s professional income is in principle taxed in the country where he or she is employed (with a number of exceptions).
Due to the corona crisis, many employees are no longer able to cross the border to work in Belgium.
As a result, these employees (are no longer taxable in the normal country of employment (Belgium) but in the country where they live.
Tax agreements in response to COVID-19
In this context, Belgium concluded a number of tax agreements with neighbouring countries in May 2020. As a result, the days of employment in the home country remained notionally taxable in the normal country of employment of the employees concerned. i.e. Belgium.
These agreements were valid until March 31, 2021. Belgium is now extending the agreements with Germany and France until June 30, 2021. (It has already extended the agreements with The Netherlands and Luxembourg).
Specific rules for cross-border workers still in place
In addition, there is still a specific regime for cross-border workers with France.
On this basis, an employee who lives in the French border region but works in the Belgian border region remains fully taxable in France.
For these French frontier employees who are still covered by the cross-border system, the situation related to corona continues to be regarded as a force majeure and they therefore remain taxable in France.
Consequences for the employer
Until 30 June 2021, a Belgian employer can now also (as for the Netherlands and Luxembourg) withhold Belgian income tax for its French and German based employees who currently work from home (in France or Germany) because of Corona.
On the other hand, the French cross-border workers covered by the specific cross-border arrangements remain fully taxable in France.