OGBL welcomes new tax treaty with Germany

The German and Luxembourg finance ministers announced on July 6 that they have reached an agreement on amendments to the German-Luxembourg tax treaty.

The amended tax treaty will increase the tolerance threshold for work performed outside Luxembourg by German cross-border workers (including teleworking) from 19 to 34 days as of January 1, 2024. The same threshold will also be introduced for civil servants, employees of the state, local authorities and public institutions, who are currently taxed in Germany from day one.

Pending the final text of the agreement, the announcement by the two governments is in line with two demands that the OGBL has been defending for several years:

  1. the harmonization of tax tolerance thresholds between the three neighboring countries.

Even before the Covid pandemic, the OGBL had been demanding that the tax tolerance thresholds be raised and harmonized. In this context, the OGBL called for the tax thresholds to be aligned with the social security threshold, which will be 49.9% for home-based work as of July 1, 2023, in accordance with the European framework agreement on cross-border telework signed by Luxembourg and its three neighboring countries.

The objective of a single threshold for tax and social security purposes has therefore not yet been achieved, but the increase to 34 days is certainly an improvement for all workers concerned. What’s more, the fact that the threshold will be 34 days for cross-border workers from the three neighboring countries from 2024 will put an end to unequal treatment within the company.

  1. equal treatment between the private and public sectors

As the OGBL pointed out in November 2020, this unequal treatment affects not only civil servants and public employees, but also private sector employees working in public institutions. Representatives of cross-border commuters, the Civil Service Department and SEW/OGBL staff delegations from the particularly affected higher education and research sector have consistently drawn the attention of the relevant finance ministries to this problem. The SEW/OGBL has consistently brought this problem to the attention of the Ministries of Finance, Higher Education and the Civil Service, as well as to the attention of parliamentarians and authorities on the other side of the border.

The OGBL welcomes the fact that these efforts, under the motto “the drop that digs the stone”, have finally led to a solution and that Germany, following France, now provides for the same threshold for public sector employees.

OGBL press release,
July 10, 2023

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