In order to take into account the impact of homeworking due to the Covid-19 pandemic, Luxembourg signed an amicable tax agreement with Belgium on 19 May 2020 regarding the taxation of Luxembourg cross-border workers. This amicable agreement provides that homeworking days performed in Belgium due to the Covid-19 measures will be considered as "force majeur". Therefore, they will not be counted towards the 24-day threshold provided for the purpose of the application of Article 15, paragraph 1 of the Luxembourg-Belgium double tax treaty ("DTT").

On 23 September 2020, the Belgian ministry of finance clarified on its website, cases where the amicable agreement does not apply including inter alia the income of self-employed workers and posted workers.

According to the Belgian Finance Minister, Alexander De Croo, "the aim has always been to reach an agreement only for the employees. [...] For the self-employed and posted workers, it is not the place where the professional activity is carried out that is important, but rather the presence of a permanent establishment or a permanent base ".

According to Article 14, paragraph 1 of the DTT applicable to independent personal services, "income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base."

The term "fixed base" has not been defined in the DTT. According to the Commentary on Article 5 of the OECD Model Convention, there are no differences between the concepts of "fixed base" and "permanent establishment".

Reference is therefore made to the commentary to Article 5 of the OECD Model Convention which provides the essential characteristics of a permanent establishment as follows:

  • a "place of business" had to exist (that is, premises, machinery or equipment);
  • the place of business had to be "fixed" (that is, established at a distinct place with a certain degree of permanence); and
  • the business of the enterprise had to be carried on through this fixed place of business (that is, the entrepreneur or related personnel had to conduct the business of the enterprise in the fixed place regularly).

The question arises as to whether homeworking due to Covid-19 health measures could jeopardise the "certain degree of permanence" required for the qualification of a "fixed base".

The OECD Secretariat issued guidance addressing this issue on 3 April 2020: "During the COVID-19 crisis, individuals who stay at home to work remotely are typically doing so as a result of government directives: it is force majeure not an enterprise's requirement. Therefore, considering the extraordinary nature of the COVID-19 crisis, and to the extent that it does not become the new norm over time, teleworking from home (i.e. the home office) would not create a PE for the business/employer, either because such activity lacks a sufficient degree of permanency or continuity or because, except through that one employee, the enterprise has no access or control over the home office. In addition, it provides an office which in normal circumstances is available to its employees."1

The Belgian Finance minister finally recalled that "Luxembourg has concluded similar agreements with Germany and France, with the same scope, that is to say only for employed workers".


1. OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis, n°9.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.