The urgency of facilitating working from home by cross-border workers

The ITEM Cross-Border Impact Assessment 2021 took a closer look at the tax and social security implications of homeworking by cross-border workers in the homeworking dossier. Together with the Secretariat-General of the Benelux Union, the ITEM Expertise Centre organised the Benelux - ITEM Conference "The Future of Work - Working from Home from a Cross-Border Perspective" on Thursday 13 October 2022 in Brussels. The focus was on the current state of affairs, what experiences there are in the various border regions that the Benelux(Plus) has and what can be learned. Through a combination of insights from science, practice and the political dimension, the issues were further clarified and possible directions for solutions were sought. The question of what the European Union and the Benelux Union can do played a central role.

Cross-border teleworking is permanent and matters in the Benelux

That (cross-border) working is now here to stay is also evident from data already collected, especially at Eurostat level - data highlighted by Frederic De Wispelaere. For 2 million people in the EU, they live in a country other than where they work. Here there are significant regional differences, as was also concluded on the basis of CBS statistics during the ITEM Roundtable in June 2022. More specifically at the Benelux level, recent labour mobility data are also available (all data concern 2021). The Benelux regions know thousands of incoming and outgoing labour flows. On balance, Belgium has more outgoing than incoming workers, where the opposite is true for the Netherlands. The outlier in terms of the number of incoming workers is Luxembourg. 212,000 workers in Luxembourg (a whopping 46% of the total workforce) come from abroad; particularly from Belgium, France and Germany.

Regarding teleworking European statistics show that it is on the lift. Especially the countries of the Benelux (plus Germany) show significantly greater percentages of teleworking, compared to the EU average. While there is no country specific data on cross-border teleworking as such, the EU average show that also the share of cross-border workers that usually work from home has increased from 2% before Covid to 12% in 2021. Given the conclusion that the Benelux-numbers are higher in general, one can assume that the percentages of cross-border teleworking are also higher. Combined, cross-border work and working from home are significant issues for the Benelux countries (and Germany), especially compared to other EU Member States.

Working from home is a keeper that deserves continued attention

Practitioners from the border regions in Belgium, Germany, France, Luxembourg, the Netherlands, and Switzerland exchanged their experiences. Whereas cross-border teleworking received insufficient attention before the covid pandemic - especially for its fiscal and social security consequences - the issue is now gaining more momentum partly due to its coincidence with other crises. These crises thus seem to be shaping the new reality. Unfortunately, it can be observed that now that Covid plays a lesser role in our daily lives, this is being used as a political argument to fall back into old (pre-covid) patterns and habits. The justification - the pandemic - for exceptional cases (including in the area of taxation and social security) has thus reportedly been dropped. Given the far-reaching consequences of (cross-border) working from home and falling back into the old regime, this should not be the case.

Indeed, the ongoing uncertainty regarding the legal status of teleworking cross-border workers also led to unequal treatment of colleagues in the workplace in border regions. Employers are reluctant to hire employees across borders because of administrative obstacles, or unforeseeable (high) employer costs. This makes the Euroregion less attractive as a labour market. On the other hand, cross-border workers are less satisfied or even quit their jobs because of insecurity. A common observation is that the number of queries around homeworking is up to several thousand for this year alone. In doing so, we cannot assume that cross-border workers and their employers are aware of all the implications around working from home. Indeed, because employers do not always fully understand the applicable rules, mistakes are made.

Lessons learned: Benelux as living lab for Europe

The main widely supported conclusion at the conference was that there should be no relapse into the old (pre-Covid) regime. Covid has acted as a catalyst and ensured that the (already existing) underexposed cross-border homeworking issues have manifested themselves with firm attention, which are also to a large extent similar in different border regions. The revision of Regulation 883/2004 is already under negotiation, but teleworking is not part of it. Adding this aspect to the current negotiations is considered difficult. Regarding taxation, Member States repeatedly encounter rigidity. Furthermore, national ministries seem reluctant to provide information, whereas taxation should be discussed transparently. The European Commission seems to be further reticent in this respect, with no sense of urgency.

Yet, solutions are available. ITEM-Prof. Marjon Weerepas highlighted them from the Cross-Border Impact Assessment: a.o. including a homeworking threshold in tax treaties, raising the substantial-work threshold (for social security) from 25% to 40% and making use of Art. 8 para. 2 or Art. 16 para. 1 of Regulation 883/2004 as has also been applied for Rhine boaters as a special group of frontier workers. However, finding a solution is linked to a number of preconditions: a clear definition of homeworking/teleworking; cooperation between national authorities; as much coordination as possible between taxation and social security; consideration of labour law implications, and ensuring legal certainty for employees and employers.

From the Benelux Union, the discussed issues and wishes are high on the agenda. The statistics for the Benelux countries endorse this urgency. As time is pressing and this calls for a thorough preparation for, among other things, new forms of work - including related questions of taxation and social security - the objective is to arrive at policy recommendations; especially for Benelux countries. Bringing together the domains of social security and taxation through Benelux working groups is one of the concrete actions to this end. Within the Benelux, for instance, a consultation was recently launched on taxation and a connection is being sought with social security. In this context, it is, for instance, important to encourage the European Commission to make changes (e.g. raise threshold from 25% to 40%). However, if this does not prove possible in the short term, the Benelux Union can and should take the initiative as Benelux countries: as a testing ground for Europe. In doing so, Article 16, for example, must be scrutinised; there should be no arbitrariness but clarity.

Both the Secretariat General of the Benelux Union and the Benelux Parliament are aware of the need for action and concrete solutions, with the Benelux Union continuing to work for a framework that offers certainty. This conference constitutes a first step, which will feed into further discussions with the Working Groups on Taxation and Social Affairs within Benelux. Secretary-General Frans Weekers: “We need to come out of traditional thinking to also do honour to the new developments.”

You can find and download the full report of the conference here In the report the slides are also included. Did you miss this event? You can watch it back on YouTube.

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