Beyond COVID-19: Luxembourg Employers and Employees Ready Themselves for the Future of Work

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Beyond COVID-19: Luxembourg Employers and Employees Ready Themselves for the Future of Work Juillet / Août 2021 Ressources Humaines AGEFI Luxembourg 25 Beyond COVID-19: Luxembourg employers and employees ready themselves for the future of work By Pierre-Jean ESTAGERIE (left), Partner, Beyond these social security and taxation con- sure the wellbeing of their employees, employers Frédéric SCHOLTUS (right), Director and Maxence siderations, employers are also building must take several elements into account, including De LORGERIL, Junior, Deloitte Luxembourg and implementing their vision of the fu- fixing clear limits on the number of working-from- ture of work. home days and setting rules regarding health, secu- ross-border relations between rity and data protection. Recent studies(1) have shown that per- Luxembourg and its neighbor- (2) ing countries are still bearing sonal tax implications, if thresholds Also, employers must stay laser-focused on identi- C are exceeded, may have a more mod- fying exceptional cases more likely to trigger per- the brunt of the COVID-19 crisis, erate impact than the usually weightier sonal tax and social security issues or questions. with many Luxembourg non-resident social security implications. Based on These include employees taking special leave, part- employees being forced to work from EU social security regulations, cross-bor- time employees, vulnerable workers who are un- their homes in Belgium, Germany or der commuters working for a Luxem- able to work in the office for longer periods, and France since March 2020. Interna- bourg employer should be affiliated to high-profile directors and managers. tional tax and business the Luxembourg social security system if less than 25% of Employers must also stay alert of the specifics of cer- communities, govern- their working time (or re- ments, and the EU social tain tax treaty provisions that apply to newly imple- muneration) over 12 mented working-from-home policies. Properly security authorities months (hereafter “the 25% managing these new working-from-home stan- quickly categorized the threshold”) is performed in dards requires long-term efforts and best practices— crisis as a “cas de force ma- their state of residence. not just during but, most importantly, after the jeure” and decided to tem- COVID-19 crisis, when the current social security In principle, homeworking is porarily freeze the thresholds and tax tolerance and amicable agreements will no counted as working time in the longer be relevant. that would normally trigger a state of residence and is included change of affiliation. in the 25% threshold calculation; Looking ahead, these topics are expected to heat up therefore, some cross-border employ- over the summer: During this exceptional situation, to miti- ees may risk exceeding this threshold during the - Belgium should soon decide whether to renegotiate gate the risk of these employees being taxed in their documentation of working activities in and out of COVID-19 crisis. Normally, the employer and em- its current tax treaty with Luxembourg to increase the Luxembourg during and after the crisis, and know ployee would need to register with the employee’s home state and/or affiliated in its social security sys- workday threshold to a possible 48 days per year. whether these activities were performed from the home country social security authority, and likely tem, Luxembourg concluded amicable tax agree- - Based on recent communications(3), Germany may employee’s home office or elsewhere. remit higher social security contributions than in ments and bilateral social security agreements with also want to explore this route with a likely 52 day-a- France, Belgium and Germany. As a result, these non- Luxembourg. On 1 July 2021, the Luxembourg authorities con- year threshold; however, this is still subject to discus- resident cross-border employees remain taxable and sion at the federal level. firmed that the following relevant amicable tax and However, as working from home due to the affiliated to the member state’s social security system - Although there is no movement in this regard from social security agreements have been extended as COVID-19 pandemic can be considered as an ex- where they would have normally worked (i.e., Lux- France, if Germany and Belgium adapt their thresh- embourg). follows: ceptional situation (“cas de force majeure”), it, therefore, does not count towards the 25% olds, this may motivate France to re-enter the race for Social security threshold during the period agreed between better working conditions for their cross-border It is worth highlighting that these agreements Tax agreements workers. must be checked on a case-by-case basis, as they agreements Luxembourg and each of its neighboring states. are limited in duration and subject to specific con- Start date: 14 March 2020 Start date: 19 March 2020 We wish you all a pleasant and safe summer holiday! ditions that are not always fully known. France Extended until Extended until In this respect, and to mitigate negative employer 30 September 2021 30 September 2021 and employee consequences, best practices need 1) UEL, Taxation: Cross-border employees working from home Employees require additional effort and discipline to be respected, including the golden rule: main- (https://uel.lu/wp-content/uploads/2020/11/uel_factsheet-homeworking_en.pdf), Start date: 11 March 2020 to regularly complete and deliver their work Start date: 17 March 2020 tain constant employee-employer communica- November 2020. Extended until 31 July schedules to their employer. While HR officers Germany Extended until tion. Every employee must keep a regular and 2) Thresholds are usually 29 days working in France for French tax 2021 (automatic month- must dedicate more time to make sure employees 31 December 2021 up-to-date working schedule to justify the loca- residents working in Luxembourg; 24 days working in Belgium for by-month extension) provide this information in a timely manner. tion of where (i.e., in which country) they work. Belgian tax residents working in Luxembourg; and 19 days working in Germany for German tax residents working in Luxembourg. Start date: 11 March 2020 Start date: 13 March 2020 Employers must check the type of employment Since the COVID-19 crisis began, employees are 3) Andreas Steier, «Das war der Digitalgipfel zum Doppelbesteuerung- Belgium Extended until Extended until sabkommen mit Luxemburg activities performed abroad (i.e., no contract sig- 30 September 2021 31 December 2021 seeking increased flexibility in both their every- (https://www.andreas-steier.de/blog/das-war-der-digitalgipfel-zum-doppelbesteue- natures by employees abroad), maintain proper day lives and in their work environment. To en- rungsabkommen-mit-luxemburg),», 25 June 2021. From in-office, to remote to hybrid work: what does the future of work look like? ore than one year after keep the focus and the pace to deliver on ple are made to have social interactions. It can be done by showing the vision, porated into our future way of working. the Covid-19 crisis sur- our obligations (daily stand ups, bi-weekly It’s also important to take into account the explaining it to leaders and managers, Different tools of the Agile Way of prised us all and threw planning and retrospective check-ups, situation of each employee as well. A 35 asking them to agree with their teams on Working can be transferred to “non-agile” M review with internal stakeholders to year old with a family has little in common the new way of working, and adapting teams. You don’t need to force people into millions of workers into remote- confirm we are fulfilling their requests and with a 55 year old living alone. An the leadership style focusing on creating a Scrum, Kanban & co. just for the sake of it. working mode, we now have the re-adapt, etc.). employee living in a studio apartment and psychological safe environment, on buil- Backlog management, prioritization, fre- necessary perspective and enough another in a house in the countryside also ding trust, on creating inclusion, on ensu- quent check-ins and retrospective reviews data to reflect on how we want to Since “delivering on time” is just showing have different psychological needs. But ring the equality of opportunities for all help any team perform better. move forward with work. Is full- one part of the story, we added some tools how do we match the needs of all staff and on assessing collective and individual time home office sustainable in to verify the health indicators of our members? How can we give employees performance by the outcomes delivered. The tools and technologies have proven the long run? Should we all go (remote) teams. Understanding the high flexibility? By asking them! Asking teams themselves and remote working proved performing teams in terms of Trust, to define their new way of working toge- We have to keep in mind that the satisfac- back to the office full-time? As is to be sustainable. But there will always be Alignment, Psychological Safety and ther. What are the needs for each job of the tion of our employees is our priority, and a need to meet and interact face to face. often the case, the answer lies in Intrinsic Motivation gives us a long-term team and for each individual in the team? that they also will re-organize their life That’s the reason why the hybrid mode, the middle and a hybrid way of view on the stability of teams and the How will team meetings be organised? with their own version of the new normal. combining a collaborative environment working may be the best way to energy levels needed to sustain the pace Without forgetting to integrate one day of We therefore must be prepared to stay part of the time (at the office) with the pos- move forward. At ING, we are pre- and deliver high quality results.
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