Guidelines for cross-border employment

In order to control the spread of the coronavirus or COVID-19 as much as possible, the Belgian government, following the example of other EU Member States, has advised everyone to perform telework wherever possible. This means that a lot of cross-border workers cannot physically carry out their professional activities in the habitual work state.

The impact of COVID-19 on the applicable social security scheme

First of all, the increase in teleworking may have an impact on the applicable social security system for employees carrying out their professional activities in more than one European Member State.

The European Regulation N° 883/2004 on the coordination of social security systems determines which system is applicable if an employee has his main residence in an EU or EEA Member State or Switzerland, but carries out his professional activity in another Member State.

In principle, the social security rules of the working State apply. However, if a substantial part of the professional activity is carried out in another Member State, the latter Member State becomes competent for social security purposes. A 'substantial part' must be understood as at least 25% of the days worked or 25% of the salary.

Since many employees (who normally do not do so under normal circumstances) now work more than 25% in their country of residence as a result of the COVID-19 measures, the question is whether the substantial increase in telework can also change the applicable social security system, taken into consideration the 25% limit.

The competent Belgian authorities decided that teleworking performed in Belgium as a result of the coronavirus will not be taken into account for the determination of the 25%-threshold and thus for the determination of the applicable social security system. This "tolerance" will avoid an enormous administrative burden (and sometimes even a financial impact) for both employees and companies as a result of this COVID-19 crisis.

Limosa

There is a temporary exemption for the Limosa reporting obligation (a notification duty for foreign employees and self-employed workers coming to work in Belgium) for foreign employees and self-employed persons that are forced to work in Belgium due to the COVID-19 crisis.

If a Limosa declaration has already been filed, but the place of employment does not correspond to the actual (tele)work place, the current reporting does not need to be changed.

This position applies from March 13, 2020 until telework will not be considered as the standard way of working. Based on our contacts with the Belgian social security authorities, this end date will probably be set around the end of May 2020. 

Impact of COVID-19 on the taxability of cross-border workers

Due to increasing teleworking, a change in taxation rights may occur as the double tax treaties are currently based on physical presence of the employee.

The Belgian tax authorities have recently announced an agreement with the Luxembourg (24 days rule) and French (30 days rule) tax authorities in which they will disregard the days worked at home due to the COVID-19 crisis when determining the taxability of the cross-border employment. For other countries, no tolerance was introduced yet.

In the meantime, the OECD published their guidelines on April 3, 2020 on implications of the COVID-19 crisis on cross-border workers in which they encourage countries to work together to facilitate the unexpected tax burdens due to the COVID-19 crisis. They recommend to follow the same approach as it is for the taxation rights related to severance pay: i.e. the State where the employee should normally exercise the professional activities has the right to tax. Additionally, OECD also stated that they are “working with countries to mitigate the unplanned tax implications and potential new burdens arising due to effects of the COVID-19 crisis” .

Furthermore, the OECD recommends that the involved countries do not take into account the period of the COVID-19 crisis to determine whether a Permanent Establishment is arising due to the unusual, but mandatory work place.

The Belgian competent authority announced that Belgium will follow the OECD advice and that an (additional) agreement with Germany, France and the Netherlands regarding the cross-border employees is in progress. Also for employees working in a ‘salary split’, more clarity will be provided.

Finally, a lot of questions are arising regarding the impact of COVID-19 on the so-called “travel exclusion” for employees benefitting from the special tax regime for foreign executives in Belgium.  For example, will the days worked abroad due to COVID-19 (e.g. temporarily living back in the home country) count as travel exclusion days and will they by consequence not be taxed in Belgium or will there be for example an irrefutable assumption that those days were performed in Belgium? Based on our contacts with the Belgian tax authorities, no decision has been made yet, but a definitive answer will be given in short notice. 

The impact of COVID-19 on immigration

Below you can find a summary of COVID-19 measures taken related to the administrative formalities that should be fulfilled when non-EER residents come to work in Belgium:

Single permit

The Belgian authorities have decided that during the coronavirus COVID-19 crisis, as an exception, an incomplete application will not be considered inadmissible and closed after 15 days as usual.

Visa

To legally stay in Belgium, a visa should be requested as well. During the COVID-19 crisis, the following measures are in force:

• New application: not possible (unless for applicants with an ‘essential function’);
• Already filed application: the Immigration Office will keep investigating the existing files. In case of a positive decision, the visa will not be issued immediately (unless for applicants with an ‘essential function’)
• Already approved application: a new visa can be applied for if the duration is not sufficient for the postponed travel.

We will follow up the above measures closely and will keep you up-to-date on this web page when anything would change in this respect. Would you have any questions about your specific situation in the meantime, please do not hesitate to contact Stijn Sablon or anyone else of our Global Mobility Team.