Mutual Agreement on Treaty Between Belgium And Luxembourg on the Taxation of Cross-Border Commuters

On 5 February 2015, the governments of Luxembourg and Belgium came to an agreement with respect to the right of taxation of salaries, wages and other similar remunerations in bilateral cross-border situations.

In a nutshell, the right of taxation under the tax treaty shall not be affected by the temporary performance of professional activities outside the State where the employment is usually exercised, to the extent that the duration of the said activities does not exceed twenty-four (24) days during a year. This agreement shall be followed by a revision of the double tax treaty between Luxembourg and Belgium. A similar agreement was reached in the past on the same issue with Germany where the tolerance is limited, however, to nineteen (19) days.

The mutual agreement (accord amiable) was signed on 16 March 2015 and is applicable as of 1 January 2015.

Employees residing in Belgium and employed in Luxembourg can refer to a vademecum prepared by the Belgian tax authorities and endorsed by the Luxembourg tax authorities via a circular letter from the tax director of 31 March 2015, updating the conditions to be applied in order to prove their physical presence in the territory of a contracting State.

According to the vademecum, proof of physical presence in the other contracting State can be provided by all means, except by oath. Documents that should be provided in evidence will depend on the type of activity the cross-border commuter performs, the distance between his residence and his place of work, the type of activity carried out by the employer and any particular characteristic that may directly affect the activity.