LUXEMBOURG – Working from home is becoming increasingly common for cross-border workers employed in Luxembourg. However, this raises tax issues. In January 2023, a study by real estate consulting specialist JLL revealed that hybrid work had reached an optimal level in 2022 in Luxembourg, with an average of one day of teleworking per week. While this is significantly below the averages of Germany (2.3 days of teleworking per week) and France (1.4 day per week), it is a level that satisfies workers in Luxembourg, according to the results expressed by the surveyed individuals.
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A recent survey by the Union of Luxembourgish Enterprises (UEL) showed that a large majority of companies wish to offer their employees two days of teleworking per week. “To attract talent, we must give more opportunities to employees,” said Jean-Paul Olinger, director of the UEL.
Blocked by European regulations However, this raises tax issues for the approximately 117,000 French cross-border workers, 53,000 German cross-border workers, and nearly as many Belgian cross-border workers employed in the Grand Duchy. Bilateral agreements allow for a maximum quota of teleworking days in the country of residence: 34 days for French and Belgian cross-border workers, and 19 days for German cross-border workers. Beyond this threshold, days worked at home are taxable in the country of residence.
France is currently considering a system that would allow cross-border workers to telework without limit. They would like to “simplify the procedures for Luxembourgish companies via a deposit collected directly” by the French public finances. “An intergovernmental tax compensation” would also allow cross-border workers to work from home without any limits on the tax side.
However, in addition to new agreements on the tax side, this desire to expand cross-border teleworking also requires a change in European regulations regarding social security. Currently, a cross-border worker who works more than 25% of their time in their country of residence is automatically affiliated with the social security of their country.
The article also notes that a recent survey by the Union of Luxembourgish Enterprises (UEL) showed that a large majority of companies wish to offer their employees two days of teleworking per week. “To attract talent, we must give more opportunities to employees,” said Jean-Paul Olinger, director of the UEL.
