Teleworking in Luxembourg

During recent years, the concerns around family-work life balance have gained increased attention amongst the political and business sectors of Europe.

Many companies are now putting emphasis on opportunities to work remotely, enhancing the work-life balance whilst avoiding long commutes during peak hours. 

Teleworking in particular is becoming highly appreciated by employers, allowing them to organise and execute work with the aim of providing employees greater flexibility and the ability to work from home. Whilst the employee reaps the benefits of remote working, the employer is also provided with certain guarantees and the security of a work contract. 

Luxembourg in particular is one country embracing the teleworking lifestyle. 

Jerome Hury, the head of social statistics at Statec has commented saying “Teleworking is booming. The number of teleworkers has tripled over the last 10 years.” 

One of the main reasons proposed for the increase is the rise in traffic and travel issues around Luxembourg, resulting in viable alternatives being considered and the suggestion of flexible work arrangements. 

With currently more than 190,000 cross-border commuters, Luxembourg consisted of employers living in Belgium, France and German with a small number Commuting from the UK. So, whilst being open to Luxembourg residents, teleworking is also becoming necessary for cross-border workers.

However, despite the ease of working from home, with it comes implications regarding income tax and social security, which in turn affects both the employee and employer. 

Due to recent strict caps on the number of days employees can work abroad, limitations to remote working have been introduced.

Foreign governments are now insisting that employees begin paying taxes in the country they’re working from. Due to the cross-border commuting, Luxembourg, in particular, has had to reach agreements with its three neighbouring countries on exactly how many days cross-border employees can work from home whilst continuing to pay their taxes entirely in Luxembourg. 

The negotiation has seen Belgium raise the number of days employees can telework between the two countries, becoming 24 days per year, compared to the 19 days per year for employees living in Germany. A new double-tax treaty has also been agreed with France, introducing a 29 day per year cap which is said to come into force during January 2020. 

As Luxembourg is the only European capital within commuting distance of three countries, the discussion of cross-border teleworking is very specific to that country. The main issue is the requirements to coordinate three legislations and tax treaties to ensure the movement goes forward. 

However, it’s not just tax that poses an issue for teleworking employees either, if an employee spends more than a quarter of their working day in the country of residence, it could result in social security complications, including benefits such as parental leave, family benefits and health insurance. 

Despite creating new possibilities for businesses and employees, teleworking could become very complicated. "The decision to live abroad is a personal choice and these employees must bear in mind the possible consequences," Pierre-Jean Estagerie, tax partner at Deloitte explains. 

As there currently is no law regarding remote working, it’s essential that an agreement is in place between trade unions to ensure there are no breaks in the terms placed forward. It’s an interesting point to consider and with Brexit moving in closer, could the number of issues revolving teleworking increase? 

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