Belgium’s Circular on the Taxation of Cross-Border Commuters

On 16 March 2015, Belgium and Luxembourg signed a mutual agreement (the “Mutual Agreement”) regarding the problem of the right of taxation of salaries, wages and other similar remunerations in bilateral cross-border situations.

On 1 June 2015, the Belgian tax authorities issued a circular letter (Circular AAFisc No. 22/2015 – No.Ci. 700.520) (the “Circular”) explaining and clarifying the Mutual Agreement.

The Circular:

  • reaffirms that the right of taxation under the tax treaty shall not be affected when the professional activities are exercised outside the State where they are usually exercised for 24 days or fewer per year (24-day threshold);  
  • clarifies that the Mutual Agreement is limited to cross-border employment under a single employer/employee relationship and details the conditions to be applied in order for employees to prove their physical presence in the territory of the other contracting State; and
  • reaffirms that the Mutual Agreement applies as of 1 January 2015.

See our May 2015 Newsletter on the key features of this Mutual Agreement.