Belgium and Luxembourg soften the taxation rules for cross-border workers

Salaries of cross-border workers will no longer become taxable in their State of residence merely because they work occasionally in a State other than the State of usual employment, provided that this occasional work lasts for less than 25 days.

In principle, a worker's salary is taxable in the State of his residence, unless he can prove his physical presence abroad for the exercise of his professional activity. Unless otherwise stated, the worker is in such a case tax exempted in the State of his residence and taxable abroad.

The Belgian tax authorities are currently controlling many cross-border workers. Some of them have difficulties in proving their physical presence abroad.

On 5 February 2015, at the joint meeting of the Belgian and Luxembourg governments, it was decided to clarify the rules applicable to cross-border workers.

The Belgian and Luxembourg tax authorities will publish joint rules regarding tax audits on cross-border workers by April 2015. These rules should enhance legal certainty.

With respect to taxation of salaries, a tolerance will be provided regarding the physical presence outside the State of usual employment. In concrete terms this will mean that performing activities outside the borders of the State of usual employment will not affect the taxation in this State if the period of activities performed out of that State last for less than 25 days.

This tolerance will enter into force as from 1 January 2015 through a mutual agreement and will be confirmed by an amendment to article 15 of the double tax treaty between Belgium and Luxembourg.

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The Belgian-Luxembourg cross-border workers who, during the year 2015, work less than 25 days outside the State of usual employment will remain taxable in that State, and will not become taxable in the State of their residence.