Corona: Provisions for border commuters in the tax treaty Germany-Netherlands

Within the course of the COVID-19 pandemic, the competent tax authorities of the Federal Republic of Germany and the Kingdom of the Netherlands adopted a regulation for cross-border workers. The agreement includes important provisions for employers with employees residing in the Netherlands.

Payroll accounting implications for Dutch employees working from home

As a rule, wages are subject to taxation in the state in which the employees exercise their employment. Hence, the right to tax income for the days employees residing in the Netherlands spent working from home is generally allocated to the state of residence (Netherlands). As a result, the employer is obliged to exempt the pro-rata wages from German taxes in the process of payroll accounting. Usually, this leads to an increased workload with regard to the payroll accounting and to growing uncertainty of the employees.

Allocation of the right to tax income in case of working from home under the Competent Authority Agreement

Days of work during which the employment was exercised at home (home office-days) solely due to the measures taken to combat the COVID-19 pandemic, may be deemed as days of work spent in the state where the cross-border worker would have exercised the employment without the measures taken (e.g. the German company). These days are to be proven e.g. by a written confirmation of the employer. This regulation is applied in order to provide a relief and to avoid a possibly required division of the wages between Germany and the Netherlands. The regulation does not apply to cross-border workers who, according to their employment contract, are generally exercising their employment at home nor to working days that would have been spent either as home office-days, independent from the COVID-19 measures.

Tax implications of (German) short-time working benefit for Dutch employees

Dutch residents who receive German short-time working benefit [Kurzarbeitergeld], unemployment benefit [Arbeitslosengeld] or insolvency fees [Insolvenzgeld] due to the measures taken to contain the pandemic are subject to tax only in the Netherlands if the total gross amount of these payments received does not exceed the sum of € 15,000. The Netherlands will take a unilateral measure (especially regarding the exemption of tax payments) in this regard. We will keep you up to date.


With respect to the above provisions concerning working from home and German social security payments of this agreement, this agreement is applicable in the period from 11th March 2020 until 30th April 2020. The application of this agreement will automatically be extended to the end of the following calendar month, unless the agreement is terminated by either the Netherlands or Germany at least one week prior to the beginning of the respective following calendar month. We highly recommend observing these rules so as not to trigger unintentional tax liability in both states (payroll taxes to be withheld by the employer and personal income taxes payable by the employee).

Special regulation for days spent idle at home

For employees who spend a day that would normally be a working day idle at home and continue to receive salary from the employer, these days are deemed as days of work spent in the state where the cross-border worker would have exercised the employment without the measures taken to combat the COVID-19 pandemic. As this treatment is an interpretation of the double taxation avoidance agreement, no time limit is applicable.