Amendment to tax treaty between the Netherlands and Germany for cross-border workers

The Netherlands and Germany announced an important amendment to their tax treaty on 14 April 2025, specifically aimed at cross-border workers. This amendment enables cross-border workers to work from home for up to 34 days a  year, such that tax is payable only in the country where the employer is based.   

Traditionally, cross-border workers have to pay tax on the income that relates to home-working days in their country of residence and pay tax in the country where the employer is based on income earned on the days worked in that country. 

The introduction of the home-working arrangement means that the income of the cross-border worker will be fully taxed in the employer’s country, even if this individual works up to 34 days a year from home. It has been agreed that a day is deemed as home-working if more than 30 minutes a day are worked at home. The purpose of this rule is to reduce the administrative burden on the cross-border worker.

It is important to note that not all cross-border workers will immediately benefit from this arrangement. People who regularly work 1 or 2 days a week from home will not be able to make use of this arrangement because they will work more than 34 days a year from home. 

The Netherlands is seeking to extend the home-working arrangement. Germany and the Netherlands have therefore signed a declaration of intent in which it has been agreed to continue discussions later on a home-working arrangement which provides for more than 34 working days per calendar year. In so doing both countries also wish to provide employers with more certainty about the tax consequences of home-working by cross-border workers. 

Before the amendment to the treaty can enter into force, it first has to undergo the normal ratification process. 

In anticipation of the amendment to the tax treaty with Germany (among other things), the Tax Plan 2025 already includes an amendment to national law. Previously, under certain circumstances, non-residents could be subject to income tax on non-Dutch working days only if there was a Dutch employer responsible for tax withholding for payroll tax. An addition to the legislation has now been made stating that taxation on non-Dutch working days is also possible if the right to levy tax on the salary is allocated to the Netherlands under a tax treaty.