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European Commission Working on Tax and Social Security Arrangements for Cross-Border Workers in Connection with Telework — Orbitax Tax News & Alerts

An answer from the Commissioner for Economy, Paolo Gentiloni, has been published in response to questions from the European Parliament in relation to tax and social security arrangements for cross-border workers in connection with telework. The questions concern the impact of the COVID-19 pandemic and the associated telework, which saw the introduction of exemptions for cross-border workers in the area of taxation and social security through bilateral arrangements that have or are expiring. As teleworking mode has proven itself more and more, many employers are now offering such telework arrangements to their employees for the future. As a result, cross-border workers could be at a disadvantage as regards tax and social security as compared to those working in their country of residence. In this regard, the Parliament asked:

  1. Is the Commission aware of this problem?
  2. Is the Commission conducting negotiations and discussions at the OECD level with a view to finding a long-term and sustainable solution for cross-border teleworkers?

The answer from the Commissioner is as follows:


1. The Commission is aware of the potential tax and social security repercussions in cases of cross-border teleworking. During the COVID-19 pandemic, the Administrative Commission for the coordination of social security systems issued some guideline which, in particular, allowed the "freeze" of the applicable legislation rules until the end of June 2022. At the meeting of the Administrative Commission in June 2022, the social security authorities have agreed on a new guidance setting out the appropriate interpretation of the EU social security provisions relevant to telework. The national institutions will have until 31 December 2022 to assess the workers' situations pursuant to that interpretation and, during that period, there might not be any change in the legislation applicable to cross-border workers.

The Commission is further working with Member States and stakeholders to find long term solutions for the issue.

2. The Organisation for Economic Co-operation and Development (OECD) plays a crucial role in the taxation of cross-border teleworkers since solutions are usually based on provisions provided by the OECD-Model Taxation Convention. However, the framework applicable to cross-border teleworkers within the EU and between OECD Member countries are not congruent and may justify actions different from those at the level of the OECD. That is why the Commission is in contact at technical level with the OECD in view of a possible coordination.