20 Mar Corona-crisis: tax consequences of working at home
Corona-crisis: tax consequences of working at home
20 March, 2020
Because of the current corona-crisis, a lot of employees are working from home and not at the office. Working from home has its advantages, such as not having travel time to the office. Working from home can, however, also have tax consequences for e.g. the travel allowance. Besides, for cross-border workers working from home could have specific tax and social security consequences.
Commuting allowance on declaration basis
In case an employee declares his/her commuting travel costs and the employer compensates the commuting travel costs based on these declarations, the employer is not obliged to compensate an employee who has not been commuting from home to work. So, when the employee is working from home, there is no obligation for the employer to pay the commuting allowance.
Fixed commuting allowance
In case you, as an employer, pay a fixed commuting allowance to your employees, you are allowed continuing the payment of the (tax free) commuting allowance in principle for 6 more weeks. If you expect that the employee will work from home long-term, you are allowed to continue the payment of the commuting allowance for the current and the next calendar month. When the employee starts working at the office again, you can pay the fixed commuting allowance as of the first month after the month in which the employee started working at the office again.
International situations: employees working cross-border
Do you have employees that live in another country than where they work? The following information about social security and salary split applies to your organisation.
Social security of employees working cross-border
When employees are working more than 25% of their working time in the country of residence because of working from home, the employees will become covered by the social security system of the country of residence instead of the country of work on the basis of normal legislation. This might be a non-desired consequence for employees and the employer and could also have adverse financial consequences.
Therefore, both the Dutch, Belgian and German social security authorities have decided that (at least for the time being) working from home/working in the home country because of the corona-crisis will not have an impact on the social security position of the employee. The employee will be covered by the social security system he was covered by before this crisis. It is not necessary to fulfill additional formalities in this respect. Although, in cases in which an employee has already been working regularly in its home country and/or will continue doing so after the corona-crisis, a A1-statement should be obtained.
Possible salary split for tax purposes
Normally, the salary of employees is taxed in the country of work. The employee is mostly covered by the social security system of the country of work.
In case employees start working from home, a part of the salary might be taxed in the country of residence. In that country the work is physically performed at this moment. In this way a salary split occurs. This means that one part of the salary is taxed in the country of work and one part is taxed in the country of residence. This might have consequences for the net salary of the employees. In addition, it might have consequences for the payroll.
Hence, working from home in another country than where the company is might have adverse tax implications. Various countries are looking whether additional measures are necessary in order to limit or to avoid these adverse consequences triggered by home (country) working due to the corona-crisis. Evidently, we will keep you informed about any developments.
Would you like to know more about the tax consequences of working at home for you and your employees? Our specialists are happy to help you.