March 25 2020

COVID-19 pandemic: agreement on residence status of frontier workers

Source: IBFD Tax Research Platform News

On 19 March 2020, the tax authorities published a press release stating that an agreement has been found with Belgium, Germany, Luxembourg and Switzerland regarding the consequences of the COVID-19 outbreak for French-residents frontier workers.

Under the Belgium - France Income Tax Treaty (1964) (as amended through 2009), the France - Germany Income and Capital Tax Treaty (1959) (as amended through 2015) and the France - Switzerland Income and Capital Tax Treaty (1966) (as amended through 2014), frontier workers may be subject to a special regime which allocates the exclusive taxation of wages to the residence state, provided they do not exceed a certain number of days worked outside the border area of the other state.

According to the press release, the fact that frontier workers work from their home during the COVID-19 pandemic will have no incidence on their status for tax purposes.

As regards the France - Luxembourg Income and Capital Tax Treaty (2018) applicable from 1 January 2020, it has similarly been agreed that working days spent at home will not be taken into account for the calculation of the 29-day "e-working" limit allowed by article 3 of the Protocol.

These measures apply with effect from 14 March 2020 and until further notice. Specific implementing measures will be detailed subsequently.