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Corona and cross-border employment: tax and social security consequences - Update


This article was last updated on 1 July 2021, in connection with the extension of the mutual agreements between the Netherlands and Belgium and the Netherlands and Germany until 30 September 2021.

On 8 May 2020 the mutual agreement concluded between The Netherlands and Belgium was published in the Dutch Official Gazette (Staatscourant). This new agreement with Belgium and the recent mutual agreement between the Netherlands and Germany provide employees the possibility to mitigate the tax consequences of the corona measures.

Many employees are currently working, as much as possible, from home due to the coronavirus. When, because of this situation, your employees are working in a country other than the country where they would normally have worked, this may influence their tax and social security position. The position of these employees needs to be individually assessed.

corona and crossborder employment

Below, we will explain some situations regarding the possible influence of the corona measures on the tax and social security position of international employees.

Think, for example, of an employee who lives abroad and works in the Netherlands for a Dutch employer. Due to the corona measures, he is currently working from home. Or you have employees who are sick at home. It can also be that due to the corona measures the activities of your company are temporarily postponed and as a result an employee (who is living abroad) cannot work (although he is available to perform services).Which consequences may these situations have for your employees’ tax position? And how does this work out under the recently concluded mutual agreements with Belgium and Germany.

What does this possibly mean for your organisation?

The before-mentioned cases have potential consequences for the tax position of your international employees. First, we will explain the choices employees need to make in cross border situations with Belgium and Germany.

Subsequently, we will discuss several cases from a Dutch tax perspective in relation to situations where no special arrangements have been made between the Netherlands and the other State. We also note that the tax authorities of other states may approach the cases differently in certain situations. 

Mutual tax agreement between the Netherlands and Belgium and The Netherlands and Germany

The Netherlands has agreed with both Belgium and Germany on the tax treatment of work days from home for the period in which corona measures are applicable (more specifically: as of 11 March 2020). The agreements with Belgium and Germany have since been extended until 30 September 2021.

The employee works from home

The Netherlands agreed with Belgium and Germany that, in relation to cross-border employees, the days they are working from home (in their state of residence) may be treated as workdays in the state where the employee would have worked under normal circumstances. Therefore, the corona measures do not have to impact the employee's tax position.

Applying this special allocation rule of the mutual agreement is, however, not mandatory. The employee remains free to decide that his employment income paid for the days he works from home will be taxed in his state of residence (i.e. the country where he is physically working). This decision will need to be made by the employee next year, when he files his Dutch and Belgium/German income tax returns for 2020. Before this decision is made, it will be important to consider the specific circumstances of the employee, for example his income level and possible deductions in both countries.

The Netherlands and Germany are investigating to include a permanent regulation in the Tax treaty between the Netherlands and Germany for the home working days of frontier workers.

Your employee cannot work, although he is available

In relation to salary paid by a company which does not exercise activities due to corona measures, the Netherlands has agreed with Germany and Belgium that the taxation rights on the salary are allocated to the country where the employee would have exercised his activities under normal circumstances. This would mean that employee’s tax position, in principle would not change. The mutual agreement does not provide a possibility to make a taxation decision in this specific situation.

Tax consequences for other countries

Your employee is working from home

In this case, the employee is still exercising his employment and is paid by his Dutch employer. He was previously working in the Netherlands and his salary was taxable in the Netherlands. Due to the corona measures he is currently working from home in his state of residence (e.g. France). His employment income would be, in general terms, taxable only in his state of residence for this period. The above outcome is in line with the common allocation rules of Dutch tax treaties. Working from home (in the residence state) results in this case in a change of employee’s tax position.

Your employee is sick

In a case where the employee stays at his state of residence due to sickness, the employment income that is related to these sick days will be allocated to the country where the employee would have exercised his activities if he was not sick (according to the Dutch tax authorities). This is in line with settled case law of the Dutch Supreme Court. 

For this example, we will assume that due to the corona measures the employee would have worked from his home office (in his state of residence). This means that the employment income connected with these sick days would be taxable in his residence state.

Your employee cannot work, although he is available to work

Another case that should be discussed refers to a Dutch employer who temporarily postpones his activities due to the corona measures and his employee cannot exercise his activities, although he is available to work. In this case, different approaches are conceivable in relation to the allocation of taxing rights on the employee’s salary. In these cases, there is an increased risk that the state of work and the state of residence apply a different approach and, therefore, double taxation would arise.

Individual assessment

We have explained a few cases where there could be tax consequences in relation to cross-border employees. It is important that the specific circumstances of each case should be determined, the applicable mutual agreement and tax treaty should be reviewed as well as the relevant jurisprudence and policy of the states concerned.

Implications for social security

The Dutch social security authorities have communicated that the social security position from a Dutch perspective does not change (for the time being) if an international employee from the EU/EEA or Switzerland temporarily works in another country (from home) than usual due to the corona measures. This applies to all cases of living and working within the EU/EEA and Switzerland.


An employee who is living in the Netherlands and is normally working exclusively in Belgium for a Belgian employer is covered for social security in Belgium. Due to the corona measures, this employee has to work from home in his residence state, the Netherlands. Based on EU law, this employee could then potentially fall under the Dutch social security system. The Dutch Social Insurance Bank (in Dutch: Nederlandse Sociale Verzekeringsbank, abbr: SVB) has however confirmed that in this temporary situation the employee remains covered by the Belgian social security system.

The social security authorities of several other EU-countries have also published a similar policy (thus, no change of the social security position in cases of temporary working from home). In addition, the European Commission has recently published a policy paper in which this approach was confirmed. In that regard, the Commission recommends that if employees temporarily work from another country due to the corona measures, this should not have an impact on their social security position.  In order to make use of this exception, the employer needs to file a request in the country where the employee would like to remain covered (an A1-statement request). 

For employees who wish to remain covered under the Dutch social security system, the SVB has indicated that it is not necessary to apply for an A1 certificate for this exception. We are in contact with other EU countries to get more clarity about the application of this exception and the procedure to be followed in other EU countries.  

The SVB has also explicitly stated that this exception also applies to ‘new cases’ (i.e. employees who start to work for an employer in another Member State or change to an employer who is located in another Member State). When these employees start their onboarding from home due to the corona measures, they are considered by the SVB as covered by the social security system of the Member State where they would normally have worked for their new employer (without the corona measures). 

Employees who are currently outside the EU/EEA and Switzerland and return to the Netherlands may (under circumstances) become covered by the Dutch social security system. For these individuals, their situation needs to be assessed on a case-by-case basis.

At first instance, it will not be necessary to terminate current social security statements (A1-statement, Certificate of Coverage or voluntary insurance). Only if the assignment/activities are actually terminated or the interruption lasts longer than 2 months, action is necessary concerning the termination of the A1-statement or the voluntary insurance.

For assignments/activities that have not started yet, it is advisable to move the starting date of the social security statement or voluntary insurance, so that a (potential) longer use of the period for which the statement or insurance was granted, can be made.

Points of attention

In all cross-border cases where the place of work is changed due to the corona measures, the tax and social security consequences in both the state of residence and the work state need to be assessed. This is important not only concerning the consequences for employees but also the potential withholding obligations of the employers. As previously pointed out, there is a chance of double taxation due to differences in the interpretation of the applicable tax treaty in certain situations.

We also experience that an increasing number of employees is currently onboarding from abroad. These individuals still reside in their home country and their employment activities in the Netherlands will start in due time (or have already started), but they currently cannot start working physically in the Netherlands.

Next to the above mentioned points of attention it must be ensured that a Citizen Service Number (in Dutch: burgerservicenummer, BSN) is requested. For employees who could qualify for the 30% ruling, it is important to assess the consequences of the belated start of their activities in the Netherlands on their eligibility for the 30% ruling, including the start date of this expat tax regime.

Contact us

Wendy Toonen

Wendy Toonen

Senior Manager, PwC Netherlands

Tel: +31 (0)65 395 93 72

Niek Schipper

Niek Schipper

Director, PwC Netherlands

Tel: +31 (0)65 388 45 79

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