Belgium has concluded agreements with Germany, France, Luxembourg and the Netherlands on the tax impact of international travel restrictions and health instructions (‘work at home’) for cross-border workers and their employers.
In force until 31 August 2020, these agreements have now been extended up to (and included) 31 December 2020.
COVID-19 Agreement with Germany
The Belgian and German authorities concluded a COVID-19 Agreement on 6 May 2020. The initial period of application of this agreement ran from 11 March to 31 May 2020 and was already extended twice. A new agreement dated 24 August 2020 has been concluded to extend the application of the Belgian-German COVID-19 Agreement up to (and included) 31 December 2020.
COVID-19 Agreement with France
On 15 May 2020, the Belgian authorities and their French counterparts concluded a COVID-19 Agreement which initially applied from 14 March to 30 June 2020 and subsequently extended to 31 August 2020. With the new agreement dated 24 August 2020, the application of the Belgian-French COVID-19 Agreement is now extended up to (and included) 31 December 2020.
Moreover, as previously indicated, the Belgian-French COVID-19 Agreement also allowed French frontier workers (within the meaning of paragraph 7 of the Additional Protocol on Frontier Workers) to work from their home (in France) between 14 March 2020 and 31 August 2020 without such days being considered as days performed ‘outside the Belgian frontier zone’, hence not triggering the loss of the frontier regime. The agreement of 24 August 2020 also extends the COVID-19 Agreement on this aspect as well.
COVID-19 Agreement with Luxembourg
On 19 May 2020, the Belgian and Luxemburg authorities concluded a COVID-19 Agreement which initially applied from 11 March to 30 June 2020 and further extended to 31 August 2020. The agreement has been extended again up till (and included) December 2020 (agreement concluded on 24 August 2020).
COVID-19 Agreement with the Netherlands
Belgium and the Netherlands concluded a COVID-19 Agreement on 30 April 2020. The period of application of this Agreement initially ran from 11 March to 31 May 2020 and was extended, initially until 30 June 2020 and subsequently until 31 August 2020. Since the new agreement concluded dated 24 August 2020, the application of the COVID-19 Agreement has now been extended until 31 December 2020 as well.
What happens after 31 December 2020?
As explained in our previous article, the idea behind the COVID-19 Agreements lies in the fiction that salaried workers are deemed to have worked in the country where they would normally have worked on the basis of their contractual obligations, despite the fact that due to travel restrictions the employee was working from home. However, this fiction does not apply to secondments and days on which the employee was already allowed to work from home (based on the employment agreement) prior to the travel restrictions due to COVID-19.
However, this fiction strictly applies as long as the COVID-19 Agreements apply. If the employer decides to continue to apply travel restrictions after these agreements have expired, normal application of the respective double tax treaties apply again. Hence, a Belgian tax resident working from home, even though he was supposed to work (e.g.) in France, income relating to these days will be taxable in Belgium.
