COVID-19 & Taxation of Cross-Border Employees: Belgium Extends Mutual Agreements with the Netherlands, Luxembourg, France and Germany Through 31 March 2022

December 22, 2021 | Blog

Because of the travel restrictions triggered by the COVID-19 pandemic, cross-border employees (unexpectedly) working from home face the risk that their employment income becomes fully taxable in their State of residence. Last year, Belgium had concluded so-called “COVID-19 Mutual Agreements” with respectively France, Germany, Luxembourg and the Netherlands to alleviate this tax disadvantage. This year, although the vaccination campaign is running and the end of the pandemic is (more or less) in sight, remote working remains the rule.

In light of this reality, Belgium announced the extension of the COVID-19 Mutual Agreements through 31 March 2022. Unless Belgium and one of the neighboring countries would, by written notification, terminate the Mutual Agreement at least one week before 31 March 2022, the Agreement will (tacitly) be extended through 30 June 2022.

Background & Problem – General Tax Rules for International Employment

Under Belgium’s Bilateral Tax Treaties (“BTTs”) and the OECD Model Tax Convention, a cross-border worker’s compensation is, in principle, taxable in the work state (i.e., the state where the worker actually and physically performs his work).  However, in specific circumstances, for instance when the cross-border worker does not spend more than 183 days during a calendar year (or any other 12-month period) in the work state, the state of residence retains the right to tax cross-border workers’ compensation.

For example, say that a Belgian tax resident works for a Benelux company and spends 70 per cent of his worktime in Amsterdam (the Netherlands).  Under the standard rules, he will be taxed on this 70 per cent of his salary in the Netherlands (i.e., the work state).  However, if due to COVID-19 restrictions, this Belgian tax resident is forced to work from his home in Brussels (Belgium) and, as a result, no longer meets the 183-days threshold, the 70 per cent will be taxed in his state of residence (Belgium). 

This creates burdensome tax implications, both for employees (who will need to pay more tax in Belgium) and companies (who are required to withhold higher amounts of wage withholding tax and perhaps even to pay higher salaries), and both from an administrative and a financial/cost perspective.

Solution – COVID-19 Mutual Agreements between Belgium & Neighbouring Countries

This is where the so-called “COVID-19 Mutual Agreements” kick in.  They fictitiously assimilate days worked from home with days worked in the country where the individual would normally have worked. Put otherwise, the employment income remains taxable in the work state despite the employee remotey working in the State of residence.

If we come back to the example of our Belgian tax resident, he will – thanks to the COVID-19 Mutual Agreements – fictitiously be deemed to work in his habitual place of work, where he would have physically performed his employment activities in a “normal” non-COVID-19 situation (i.e., in the Netherlands, his work state). Thus, there will be no negative impact on his tax position, either in Belgium or in the Netherlands.


Please note that these COVID-19 Mutual Agreements:

  • Have only been concluded between Belgium and the Netherlands, France, Germany and Luxembourg. For any other country, Belgium will continue to apply the standard rules and be entitled to tax the employment income relating to the days worked from home, despite the COVID-19 travel restrictions;
  • Only apply from 11 March 2020, through 31 March 2022 (unless Belgium and the neighbouring countries would – implicitly or explicitly – agree to a further extension). After that date, we fall back on the standard rules under the Double Tax Treaties;
  • Do not apply to self-employed workers, including company directors;
  • Do not apply to employees with the “foreign executive” or expat status;
  • Do not apply to secondments (i.e., employees who are temporarily seconded to work in another state);
  • Do not apply to homeworking days not linked to governmental measures (e.g., for employees who – under their employment contract – usually work from home).

For further details, please note that the Belgian Revenue Service has published Circular Letter 2020/C/81 dated 17 June 2020 (available here in French, and here in Dutch) providing answers to Frequently Asked Questions (FAQ).  It explains, for example, that cross-border employees are required to keep sufficient evidence of their eligibility through (i) a written certificate from their employer about the days worked from home because of the COVID-19 restrictions, and (ii) a document showing an effective taxation of their employment income in the State of source.  In particular, the employers’ certificate must include specific mentions listed in the Circular Letter.  Taxpayers having any unaddressed questions are invited to send an email to

For more information, please contact Werner Heyvaert or Vicky Sheikh Mohammad.

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