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France Extends COVID-19 Tax Deals For Cross-Border Workers

Monday, September 7, 2020

The French Ministry of Finance confirmed on August 31, 2020, that several tax agreements applying to cross-border workers during the COVID-19 crisis have been extended.

According to the ministry, the special tax agreements with Belgium, Germany, Luxembourg, and Switzerland, which clarify the tax situation of cross-border workers unable to travel to their normal place of work, have been extended until December 31, 2020.

In summary, the agreements provide that remunerated days spent working from home as a direct result of the health crisis, which would otherwise have been spent at a place of work in the other jurisdiction, will be considered to have been exercised in that other state.

As recently announced by the Luxembourg Government, France's Ministry of Finance also confirmed that, as agreed by the two states on July 16, 2020, the COVID-19 epidemic constitutes a case of force majeure for the purposes of the two countries' double tax agreement. Therefore, days worked by a frontier worker in their state of residence owing to COVID-19 restrictions on movement will not be counted towards the 29-days rule in the 2018 France-Luxembourg double tax treaty.

Under the 29-day rule, workers resident in one contracting state but employed in the other contracting state are considered taxable in the latter state when undertaking remunerated work in the state of residence, provided time spent working in the state of residence does not exceed 29 days in a year.

The suspension of the 29-day rule will also apply until December 31, 2020.