Some 88,000 people who live in Belgium work abroad, while around 52,000 people come from neighbouring countries to work here. From the end of this month, the beneficial tax system that people on both sides of the border enjoyed will change.
During the pandemic, frontier workers living abroad and working in Belgium (or vice versa) could work from home without this impacting their social security or taxes. However, from 30 June, the situation will revert to the pre-pandemic system, HR service provider SD Worx warns.
"After 30 June the international double tax treaties for cross-border workers will again be enforced," Véronique Boeva, International Employment Manager of SD Worx, said.
These treaties are not set at an EU level but are decided by Member States in bilateral agreements. Belgium has such agreements with Germany, the Netherlands, France and Luxembourg.
About half of Belgians who hold a job abroad work in Luxembourg (53%). This is followed by the Netherlands (30%) and France (10%). French people make up the majority of incoming corss-border workers in Belgium. Frontier workers generally pay tax in the country where they work.
What will change?
As a result of the Covid-19 restrictions on travel, 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 saved cross-border workers from facing potentially negative tax consequences by being taxed in their home country rather than country of work.
From 30 June, this will end for the Netherlands and Germany (with 39,009 and 7,838 cross-border workers affected respectively); for France and Luxembourg (with a possible 46,403 and 46,808 cross-border workers affected respectively) it will also soon come to an end.
This is an important change for employers who want to allow employees to work partly from home, SD Worx warns. It could lead to situations of simultaneous employment arising, "with the possible obligation to carry out wage processing in two countries."
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From 30 June, the National Social Security Office (ONSS) will once again apply the normal tolerance of up to 25% of working time outside the country where the workplace is, allowing employees one day of homeworking (in another country) each week.
"But that does not put an end to the tax question marks. Taxation differs depending on the country and the proportion of telework," Bart Hollebekkers of SD Worx said.
These changes will affect both people living in Belgium and working abroad as well as people from other countries working in Belgium.