German cross-border workers, have you been subject to double taxation on your teleworking days?

ALEBA would like to draw the attention of German cross-border workers in Luxembourg to the fact that they may be subject to double taxation on their teleworking days.

If you telework for more than 34 days and work for a Luxembourg branch of a German company, your employer must issue two tax certificates:

1. A German tax certificate for the days you work from home in Germany. This salary is calculated in accordance with German tax law;
2. A Luxembourg tax certificate for your total salary. This certificate shows the salary that is taxable in Germany, but calculated in accordance with Luxembourg law.

The figures on the German and Luxembourg tax certificates are often not identical, as there are differences between German and Luxembourg tax law: for example, a normal company car is invoiced at 1% of the list price under German regulations. In Luxembourg, on the other hand, it is invoiced at 1.6%.

The following situation then frequently arises: as the amounts stated on the German and Luxembourg tax certificates do not match,

• The amount stated on the German tax certificate is considered;
• The salary exempted due to teleworking indicated on the Luxembourg tax certificate is added.

This results in double taxation of teleworking days: once with the German amount and once with the Luxembourg amount.

Simplified example:

An employee earns €100,000 under Luxembourg tax law. He spent 20% of his working time teleworking in Germany. He is employed by the Luxembourg branch of a German company.

On the Luxembourg tax certificate, a 20% exemption of €100,000, or €20,000, is indicated for the days worked remotely.

Let us assume that, according to German tax law, this 20% does not amount to £20,000, but to £19,500.

The employee will then often find the following in their German tax assessment:

The following are taxable:

•  €20,000 from the Luxembourg tax certificate;
• plus €19,500 from the German tax certificate.

This amounts to a total of €39,500.

However, it would be correct for only €19,500 from the German income tax certificate to be taxed.

Those affected are advised to file an objection and inform the German tax authorities that they are only required to take into account the amount stated on the German tax certificate. You can find sample forms on the ALEBA website. ALEBA invites those affected who are not yet members to join so that they can benefit from the union's support.

We often hear the argument that the value indicated on the Luxembourg certificate should be used, but this is also incorrect.

Important: this issue does not concern employees of a Luxembourg company (SA, Sàrl), but rather employees of a Luxembourg branch of a German company. This is because Luxembourg companies are not required to issue a German tax certificate.