Why remote work matters for cross-border workers
With over 220,000 cross-border workers commuting daily to Luxembourg, remote work has become a critical issue. Since the COVID-19 pandemic, working from home has become widespread, but for cross-border workers, it is not simply an organisational choice: each remote work day can have significant tax and social security consequences.
In summary: Cross-border workers residing in France or Belgium may work remotely up to 34 days per year without tax implications. For German residents, the threshold is currently 19 days. Beyond these thresholds, the corresponding income becomes taxable in the country of residence.
The 34-day rule: country by country
Bilateral tax agreements between Luxembourg and its neighbouring countries define a maximum number of remote work days allowed without a change in taxation. Beyond this threshold, income corresponding to remote work days becomes taxable in the worker's country of residence.
France: 34 days
Since the agreement of 20 March 2023, cross-border workers residing in France may work remotely up to 34 days per year from home without affecting their Luxembourg taxation. This threshold applies per calendar year and covers all days worked outside Luxembourg (remote work, business travel in the country of residence, etc.).
Belgium: 34 days
The amendment to the Belgian-Luxembourg tax convention, which came into force on 1 January 2023, also sets the threshold at 34 days per year. The conditions are similar to those of the Franco-Luxembourg agreement.
Germany: 19 days
For cross-border workers residing in Germany, the tolerance threshold remains at 19 days per year, under the current bilateral agreement. Negotiations between Luxembourg and Germany are underway to raise this threshold, but as of the date of this article, no new agreement has been ratified. It is advisable to regularly check the status of these negotiations with the Luxembourg tax authorities.
| Country of residence | Max days / year | Legal basis |
|---|---|---|
| France | 34 days | Agreement of 20 March 2023 |
| Belgium | 34 days | Amendment of 1 January 2023 |
| Germany | 19 days | Bilateral agreement (under renegotiation) |
How to count remote work days
Counting remote work days follows specific rules that are important to understand in order to avoid inadvertently exceeding the threshold.
Important rule: Any day during which part of the work is carried out from the country of residence counts as one full day of remote work, even if the employee only works a few hours from home.
The following are counted in particular:
- Days of remote work at home (even partial days)
- Days of business travel in the country of residence
- Training days attended from the country of residence
Days of leave, sick leave or short-time work are not counted towards this total.
What happens if you exceed the threshold?
If the number of remote work days exceeds the permitted threshold, the tax consequences are significant. Under the agreements in force, all excess days become taxable in the worker's country of residence, rather than in Luxembourg.
In practical terms, this means:
- The employee will need to declare part of their income in their country of residence
- The Luxembourg employer may be required to apply an adjusted withholding tax
- A dual tax declaration will be necessary, significantly increasing administrative complexity
Please note: In the case of France and Belgium, exceeding the 34-day threshold results in taxation in the country of residence only for the excess days (not for all income). It is nevertheless strongly recommended to consult a tax adviser to assess the precise impact on your situation.
Social security: the separate 25% threshold
Independently of tax rules, social security is governed by separate European regulations. Under EU Regulation (EC) No 883/2004, a cross-border worker is affiliated to the social security system of the country where they carry out their work.
Critical threshold: If a cross-border worker carries out more than 25% of their activity in their country of residence (approximately 56 days per year based on 220 working days), their social security switches entirely to the country of residence.
This change of affiliation has major consequences:
- Social contributions are levied at the rates of the country of residence (generally higher than in Luxembourg)
- The employee loses access to the Luxembourg system (health insurance, pension, etc.)
- The employer must register in the employee's country of residence
It is therefore essential to distinguish between the tax threshold (34 days or 19 days) and the social security threshold (25% of working time). A European framework agreement, in effect since 1 July 2023, allows this social security threshold to be raised to 49.9% of remote work for signatory countries, subject to specific procedures with the competent bodies. It is recommended to check whether your country of residence has signed this framework agreement.
Practical advice for cross-border workers
To avoid any tax or social security issues, here are the best practices to follow:
Keep an accurate log
Record each remote work day in a calendar or dedicated tool. Keep supporting evidence (emails, VPN connections, etc.) in case of a tax audit.
Coordinate with your employer
Ensure your employer has a compliant remote work policy and that day tracking is in place. Request an annual certificate of the number of remote work days.
Plan ahead
Plan your remote work days at the start of the year to avoid exceeding the threshold at the end of the year. Keep a safety margin of a few days.
Consult a tax adviser
Every situation is unique. A tax adviser specialising in cross-border matters can guide you and optimise your situation in full compliance.
Calculate your net salary in Luxembourg
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