When dealing with the effects of the Corona pandemic on employees working abroad – especially cross-border commuters – there is often talk of mutual agreements. These consultation agreements, which build on existing double taxation agreements between the Federal Republic of Germany and many of its neighboring countries, are designed to prevent Corona-related tax discrimination against employees who, due to restrictions, have to work in their home office instead of in their country of employment. And even though one reads a lot about the conclusion of these agreements, their correct and complete applications are still unknown to many. For this reason, the most important questions on how to deal with the corresponding regulations will be highlighted here.
Working days for which wages were received and on which employees had to perform their work from the home office due to measures to combat the Corona pandemic can be regarded as if the employee had performed them in the country in which he would have performed them even without the Corona pandemic. In short: If an employee had to work from the home office in Germany due to Corona, although he would actually have performed these work days in a neighboring country with an existing agreement, the days are still to be considered as having been spent in the neighboring country (so-called “factual fiction”).
There are some requirements for the application of the factual fiction of the consultation agreements. For example, the activity of the employee concerned may only take place from the home office due to corona-related regulations, whereas otherwise he would have worked in the actual country of activity. In other words, if it was agreed with an employee before the start of the pandemic that he or she would work two days per week from the home office, these days cannot now be regarded as corona-related home office, even if the restrictions that have now come into force generally exclude employment in the country of activity.
In addition, employees must submit a confirmation from their employer to their tax office for the application of the regulations. This must show exactly the corona-related home office days. In this respect, it is advisable to keep a precise record.
The third prerequisite for the application of the consultation agreements is that the corona-related home office days actually continue to be taxed in the actual country of activity. Proof of this must be provided if necessary.
In principle, only working days spent in the home office due to “measures to combat the Corona pandemic” are covered by the aforementioned regulations. This is the case if the home office was only carried out due to regulations issued by one of the governments of the two countries that concluded the respective consultation agreement. This can include travel restrictions or curfews, but also the obligation for companies to draw up a hygiene concept in order to carry out their business activities. Thus, if employees are temporarily sent to the home office on the basis of a hygiene concept drawn up by the company (for example, due to presence group regulations), such working days may also fall under the scope of application of the mutual agreement.
The consultation agreements concluded between Germany and its neighboring countries are, so to speak, aids of the state, the use of which makes it possible for employers and employees to prevent negative effects of the Corona pandemic. As in the case of all aid measures related to combating the negative effects of the Corona virus, these are not obligatory regulations. Each affected employer or employee is therefore free to decide whether or not to make use of the regulations, subject to the relevant requirements.
Consultation agreements are currently in place with the following neighboring countries:
In principle, the period of validity of the individual consultation agreements was initially limited and extended from month to month in agreement between the two agreement states. However, many of the agreements have now already been extended until December 31, 2020 or even into 2021. Thereafter, it will be reviewed on a month-by-month basis whether it is appropriate and necessary to continue the agreements. In principle, however, the agreements remain in force as long as they are not terminated by one of the parties.
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