COVID-19 has led to many cross-border employees being displaced, which could result in a switch of their tax position if the taxation rules normally in place are applied. In recognition of this fact, Dutch authorities agreed with Germany and Belgium to modify the tax position under the normal rules as applied to those employees.
Cross-border workers from The Netherlands who commute to Germany or Belgium for work, and work on-site in Germany or Belgium, because of COVID-19 restrictions, have had to stay in their state of residence, The Netherlands, and have had to work from their home office there.
Under the mutual agreement, in such circumstances, the worker is deemed to be performing his work in the contracting state in which he would have carried out his activity normally without the COVID-19 pandemic.
Therefore, under the agreement, where an employee who usually lives in The Netherlands and works in Germany or Belgium has to work in his home office in The Netherlands due to the COVID-19 pandemic, his work activity is deemed to have been performed in Germany or Belgium (in cases where the employee prefers this), whichever is the normal place of work.
Such mutual agreements exist between many countries, especially in the European Union. The agreements were intended to be temporary and will now come to an end on 30 June 2022.1