Cross-border workers: social security agreements extended

15/06/22

Update 18 November

Previously it was announced that a more structural agreement with regard to the social security consequences for cross-border workers is being researched on an European level. Based on recent comments from the Minister of Social Affairs and Employment, these solutions are still being worked out. We understand that the current 'no impact' policy has therefore been extended up to 30 June 2023. This means that there will be no change in the social security positions for cross-border workers up until 30 June 2023, even if they work from home for more than 25%.

On 14 June 2022, the Minister of Social Affairs and Employment announced during a plenary debate that the COVID measures with regard to social security will be extended until the end of this year. However, we would like to point out that the COVID measures for the tax position of cross-border workers have not been extended. Please see below what that means for you.

Social security consequences when working cross-border

Previously, agreements were made at an European level concerning the social security position of cross-border workers in light of the COVID-19 crisis. It was deemed undesirable that cross-border workers who had to work from home due to the COVID-19 crisis would suddenly become covered under another country’s social security system. More information on the background of these agreements can be found in our article 'COVID and working cross-border - Update April 2022' and our earlier publication 'Corona and cross-border employment: tax and social security consequences'.

These agreements were set to expire on 30 June 2022, but the Minister has now announced that an agreement has been reached that frontier workers will not be confronted with a change in social security position until 1 January 2023. In other words, if you as a frontier worker structurally work 2 or 3 days a week from your home office after 30 June onwards, you will remain covered by your current social security system. The technical details of the extension are still being worked out, while a structural solution is being sought in the coming six months. Naturally, we will inform you as soon as more is known.

Tax implications when working cross-border

The above extension relates exclusively to social security. The so-called 'Mutual Agreement' between the Netherlands and Belgium and the Netherlands and Germany will only apply up to and including 30 June. Based on this agreement, you as a cross-border worker could attribute (home)working days to the country where you would have worked under normal circumstances. As described in our previous publication, it has already been announced that these Mutual Agreements will not be renewed after 30 June 2022.

However, it recently emerged from an answer to parliamentary questions that the Netherlands is in talks with Belgium and Germany to see whether it would be possible to make new agreements in the context of increased homeworking. This will then no longer be shaped as a crisis measure, and it may be that the tax treaty will have to be adjusted. Whether this will be possible and by when is still unknown: the State Secretary emphasized that introducing a 'home working scheme' is very complex. More information on the progress of these talks is expected before the summer recess.

What does this mean for you and your organisation?

If your employee(s), or if you as a frontier worker, work from home after 30 June, then the extension will be very much welcome to ensure that there is no change in social security position up until 1 January 2023.

Please note, however, that the mutual agreements with Belgium and Germany in the context of the tax implications have not been extended. These agreements will expire after 30 June 2022. We recommend that you keep a close eye on whether your employee's tax liability may change as a result, even if their social security position stays the same.