A cooperative of workers living near the borders between Belgium, the Netherlands and Germany is calling for a long-term solution to taxation, especially regarding those working from home.
During the pandemic, many cross-border workers were no longer able to go to their workplaces and instead worked from home. Belgium agreed with its neighbours that telework during the pandemic would be considered to be the same as working in the neighbouring country. This allowed those living abroad and working in Belgium (or vice versa) to work from home without this impacting their social security or taxes.
However, from 30 June last year the situation reverted to the pre-pandemic system. This means that employees who work from their homes in Belgium without physically travelling to their office abroad are now taxed in Belgium – perhaps at a higher rate than in the country of employment. This leads to a disparity between employee salaries.
For this reason, Euregios – an association of cross-border cooperation initiatives located along the borders between Belgium (here, these include Limburg, Liège and the East Cantons), the Netherlands and Germany – is calling for the introduction of long-term solutions for the taxation of cross-border teleworkers.
Avoiding double taxation
In a letter to the finance ministers of the states concerned, including Belgium's minister Vincent Van Peteghem, the organisations deplored the failure to put in place any lasting measures in the area of taxation of frontier workers once the exceptions made during the pandemic came to an end.
Unlike social security solutions for cross-border workers, these treaties (aimed at avoiding double taxation) are not set at an EU level but are decided by the Member States in bilateral agreements.
"The absence of tax provisions creates a situation in which similar circumstances in different border regions can lead to fundamentally different taxation." The signatories noted that this has not only led to discrimination against cross-border workers but that this situation could make cross-border work less attractive.
"If the attractiveness of a cross-border labour market disappears, it is a great loss for employees and employers alike at a time when the shortage of skilled labour is getting worse and worse," Emile Roemer, President of the European Grouping of Territorial Cooperation (EGTC) Euregio Meuse-Rhine, said.
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The group argued that flexible solutions to the taxation of cross-border workers, without tax consequences, should ensure that working across borders remains attractive.
The letter has also been sent to Dutch Finance Minister Sigrid Kaag, German Federal Finance Minister Christian Lindner, Finance Minister of North Rhine-Westphalia Dr Marcus Optendrenk and Finance Minister of Lower Saxony Gerald Heere.
