09. October 2023 The planned revision of the existing double taxation agreement (DTA) between Germany and Austria is associated with a significant change in the cross-border commuter regulation (Art. 15 para. 6 DTA). The tax treatment of cross-border commuters is to be adjusted and in particular the influence of home working days on this regulation is to be clarified.
Current legal position
The cross-border commuter regulation between Germany and Austria concerns persons who live in one of the two countries and work in the other. The right of taxation for income from employment currently belongs to the country of residence. However, there are exceptions to this rule if the work is carried out in the other state.
According to the current legal situation, the income can nevertheless be taxed in the country of residence if certain criteria are met. The person concerned must have his residence near the border of a contracting state and at the same time have his workplace near the border of the other state. In addition, it is required that the person returns from his workplace to his residence every working day. The criterion for proximity to the border is that both the place of residence and the place of work must be within a distance of 30 km as the crow flies on either side of the border.
During the COVID 19 pandemic, many workers were encouraged to work from home, which led to increased use of home office. Germany and Austria had reached a temporary consultation agreement that brought relief, especially for cross-border workers. Pandemic-related home office days (“non-return days”) were introduced, which were not taken into account when applying the cross-border commuter regulation. However, this regulation only applied for the duration of the pandemic and expired on 30 June 2022.
The planned amendments
A draft of an amendment to the DTA between Germany and Austria is currently available. This draft provides that the cross-border commuter status will no longer be affected by home office days in the future, provided that these take place in the vicinity of the border. This is intended to put the previous regulation, which only exempted pandemic-related home office days, on a permanent basis.
New definition of “proximity”
The draft also redefines the term “proximity to the border”. Previously, it was necessary for the place of work to be within 30 kilometres of the border as the crow flies in order to be eligible for the scheme. With the planned changes, it is sufficient if the employed activity is “usually carried out near the border”. This eliminates the need for a daily commute.
Further aspects
The planned changes are based on a similar bilateral agreement that Germany has already reached with Switzerland. This agreement entered into force in July 2022 and provides for similar provisions for home office working days.
Conclusion
The upcoming revision of the cross-border commuter regulation between Germany and Austria takes into account the changed working conditions influenced by the COVID 19 pandemic. The planned changes provide clarity for employees working across borders and create a solid basis for the tax treatment of home office working days near the border.
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