The lockdown in the Netherlands was extended this week. Working from home will therefore continue to be essential. What does this mean for cross-border workers, who are working for a Dutch employer, but are now still obliged to work from home in their country of residence, or are staying at home paid because they cannot work (think of – for instance - restaurant or store employees)?

From a legal and tax perspective, this could be problematic. After all, on the basis of European legislation, only the social security rules of one Member State can apply. A resident of Belgium or Germany who works in the Netherlands for a Dutch employer is covered by Dutch social security. If he or she works from home, the work is (also) performed in Belgium or Germany. Cross-border workers who work from home for 25% or more, are socially insured in their country of residence, instead of in their country of work.

Working from home frequently can therefore result in the social security system changing from (in this case) the Netherlands to Belgium or Germany. The consequences for employees and employers are considerable, think of health insurance, pension, sick pay and the payment of social premiums. This can lead to complex situations.

Fortunately, the Netherlands has already reached agreements with Belgium and Germany in 2020 regarding the tax treatment of homeworking days, in relation to the corona crisis. The agreements mean that homeworking days may be treated as days worked in the country where the employee would normally have worked, subject to the condition that these homeworking days are then taxed in the other country.

For the so-called 'stay-at-home cross-border worker', i.e. employees who would normally work in the Netherlands, but are now forced to 'stay at home paid' in Belgium or Germany due to the corona crisis, the following applies. During this period, the salary of the stay-at-home workers will continue to be taxed in the country where they would normally have worked. Thus, nothing changes for these employees in this regard. If they would normally have worked in the Netherlands, the Dutch employer continues to withhold payroll tax from the salary.

The agreements between the Netherlands and Belgium and the Netherlands and Germany continue at least until March 31, 2021. Until that time, you are safe.

Questions about cross-border work and/or working from home, whether or not related to corona? Ask the labour lawyers of SPEE attorneys & mediation for advice.