UEL / News

Brochure: Cross-border teleworking: what are the applicable tax rules?

15.02.2023

Employers, do you have cross-border teleworking employees and are you wondering about the tax consequences for your employees and for your company?
Please see below for tax news relating to Luxembourg employers with employees residing in France and teleworking.

We invite you to consult our brochure which summarises the different tax rules applicable to your cross-border teleworking employees (including in the context of the Covid-19 health crisis) as well as the tax consequences that may result for you as an employer.

This brochure aims to help you to better understand the possible tax obligations for you by answering the most frequently asked questions such as

  • What are the tolerance thresholds applicable with each border country?
  • What are the specificities of the Covid period and how to apply the tolerance thresholds for 2022?
  • In which cases is there a risk of recognition of a permanent establishment for your company?
  • What are the supporting documents to be kept by employers?
This document was drawn up by the UEL with the support of the Chamber of Commerce and in collaboration with the ABBL, the ACA, the Chamber of Commerce, the Chamber of Trades, the clc, the Federation of Craftsmen, the FEDIL and the Horesca.
The information contained in this document is of a general nature and is not intended to address the specific situation of any particular individual or company. The information cannot, and should not, be used as a basis for decisions without seeking professional advice and without a detailed analysis of each situation.
In addition, this brochure will be regularly updated on the basis of available information.
Cross-border telework: what are the applicable tax rules (PDF) - Updated 16.05.2023
FRENCH FOCUS
The French Budget Bill for 2023 amends the reporting obligations of foreign employers in respect of an activity carried out occasionnaly in France (for example through teleworking) by their French cross-border employees who remain covered under the Luxembourg social security regime. Prior to this mechanism, Luxembourg employers previously had to pay the French withholding tax monthly as soon as their cross-border employees were performing an activity carried out outside of Luxembourg and which exceeded the annual tax tolerance threshold.
As from 1 January 2023, the French government has replaced this withholding tax mechanism by a direct withholding of the French personal income tax from the employee’s personal bank account by the French tax authorities (i.e. “l’acompte contemporain”) in order to simplify the reporting obligations of Luxembourg employers which had to fulfill the conditions mentioned above.
According to the practical guides published by the French government, this mechanism of the direct withholding of the French personal income tax from the employee’s personal bank account by the French tax authorities (i.e. “l’acompte contemporain”) creates the following specific obligations, as from 1 January 2023:
  • On the employers’ side:
Luxembourg employers will have to declare annually the salaries paid to the concerned resident employees who are taxable in France according to French tax rules.
  • On the employees’ side:
The employees residing in France and receiving remunerations paid by a Luxembourg employer in respect of an activity carried out in France will have to pay taxes on their income from Luxembourg source (including for their teleworking activity). This tax will be paid by way of direct withholding of the French personal income tax from the employee’s personal bank account by the French tax authorities (i.e. “l’acompte contemporain”).
The French government has published detailed practical guides to enable Luxembourg employers to better understand and fulfill their new obligations.
For more information, please consult the following links:
  • Employers’ side:
https://www.impots.gouv.fr/actualite/amenagement-du-prelevement-la-source-pour-certains-employeurs-etablis-hors-de-france-0
  • Employees’ side :
https://www.impots.gouv.fr/actualite/amenagement-du-prelevement-la-source-pour-certains-employeurs-etablis-hors-de-france-1