On July 6, 2023, Luxembourg Minister Yuriko Backes and her German counterpart Christian Lindner signed an amendment to the bilateral tax treaty between the Grand Duchy of Luxembourg and the Federal Republic of Germany, increasing the tax tolerance threshold to 34 days from the current 19. From January 1, 2024, German cross-border employees would then be able to work up to 34 days outside the Grand Duchy of Luxembourg, without any impact on their tax situation.
It is important to remember that the tax tolerance threshold applies not only to teleworking, but to all work done outside Luxembourg.
We would also like to take this opportunity to remind you that as of July 1, 2023, social security tolerance for cross-border teleworkers has come to an end.
As already communicated, a European framework agreement has been put in place enabling cross-border employees to telework up to 49% of their working time without impacting on their social security. As part of this, all Luxembourg companies have received a token to declare teleworking within their entity on a regular basis. Steps therefore must be taken to ensure Luxembourg social security cover for employees teleworking in their country of residence, whether employer wish to apply the provisions of the framework agreement (< 50% of working time teleworking) or European regulations (< 25% of working time).
We can of course help you set up your teleworking implementation and help you with all the administrative formalities that have now become essential!
Please don't hesitate to contact us for further information: In Extenso Belux.