The Netherlands and Germany have agreed to modify their tax treaty to simplify taxation for cross-border workers who work remotely. This change, announced April 14, 2025, represents a significant development for businesses with employees working across these borders.
Key Changes:
- Cross-border workers can now work remotely from home for up to 34 days per year without triggering tax obligations in both countries
- The work country (where the employer is based) retains full taxation rights for these remote work days
- Any remote work session lasting more than 30 minutes counts as a “home working day”
- The rule applies to both private sector and government employees
Business Benefits:
- Simplified payroll administration: No need to split income taxation between two countries for limited remote work
- Reduced compliance costs: Less complex tax calculations and potentially fewer tax advisor fees
- More certainty: Clearer rules for both employers and employees about net income
Limitations:
- The 34-day allowance falls short for employees who work remotely 1-2 days per week
- Both countries have signed a letter of intent to discuss extending beyond the 34-day limit
Implementation Timeline:
The treaty modification still requires approval from both Dutch and German parliaments before taking effect.
For companies with cross-border workers who want to implement remote work policies, this change offers some flexibility while still requiring careful tracking of remote workdays.
