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Germany and Luxembourg Extend Cross-Border Tax Pact to March 31

Posted on Dec. 8, 2021

Germany and Luxembourg have extended until March 31, 2022, the mutual agreement on the tax status of cross-border workers who work from home during the coronavirus pandemic, according to a release published December 6 by the German Ministry of Finance. (German text of extension.) 

The mutual agreement, signed October 7, 2020, was previously extended to December 31. (German text.) It states that days spent working from home because of pandemic measures are considered working days in the country in which the work would normally have been carried out, and those days don’t have to be taken into account under the 19-day rule in the 2011 agreement on taxation of wages of cross-border workers. The 2011 agreement states that if an employee performs work in their state of residence, an exemption in that state applies to the wages earned if the worker is present in that state for fewer than 20 days in a calendar year, and the wages are taxed in part by the state that employs the worker. (German text of 2011 agreement.) 

The mutual agreement was originally signed April 3, 2020, and replaced by the October 2020 agreement, which includes the same provisions but also retroactively applies them to salaries, wages, and other similar income from government or public service under article 18(1) of the Germany-Luxembourg tax treaty.

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