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

On 14 April 2025 the Netherlands and Germany signed a protocol amending their mutual tax treaty. The outgoing Minister of Foreign Affairs, David van Weel, has since submitted this protocol to the House of Representatives for tacit approval. An explanatory note was also published.

The amending protocol introduces a home-working arrangement and lays down the interpretation of the public sector provision that applies specifically to this agreement.  

Working-from-home arrangement

Although the Netherlands would have preferred a wider scheme, a ‘de minimis arrangement’ (which is limited in scope and duration with a limited impact on the allocation of the right to levy tax as a result) was agreed upon.  

The Netherlands and Germany have agreed that cross-border workers may work no more than 34 days a year from home in their country of residence without this affecting where the income earned from that will be taxed. If a cross-border worker observes this 34 day rule, the tax levied on the income remains entirely in the employer's country. The nett income then does not change relative to a situation where the cross-border worker never works in the country of residence.

It is recognised that the arrangement may have some negative effect on the amount of the nett income, as the benefits of a ‘salary split’ are then lost.

For the purpose of calculating the 34-day threshold, working days in third countries are deemed to be days worked from home. A day is also only counted when 30 minutes or more are worked in the country of residence or in one or more third countries, provided that the employee is paid for that day. A description is also given of what the term ‘working days’ means.

It means the days actually worked. These are all the days in a calendar year on which the employee actually performs work under the employment contract and for which a remuneration is paid. However, on-call duties, even when the employee is called upon to actually perform work, are not included in determining a working day. Finally, it explains how to deal with days on which an employee does not actually undertake work but is still paid. 

When the employee does not actually perform work due to: 

1. Leave after giving notice of ending the employment;
   Or  
2. Spending days inactive at home on the instructions of the employer, or of a government of a treaty state, then the remuneration shall be deemed to have been provided for work carried out in the treaty country in which the work should actually have been performed had any of the situations referred to above not occurred.

Public sector personnel

The amending protocol also includes a threshold arrangement for public officials (including those employed by a public sector entity) which is comparable to what has been agreed for 'regular' (private sector) employees. It is stated that if the government work is not exclusively carried out in the country of residence, there will be a division - or 'splitting' - of the right to levy tax between the two Treaty States depending on where the services are provided. 

This division of the right to levy tax is based on the German interpretation of the public sector article, despite the Dutch interpretation of the same article which is that, in principle, splitting the right to levy tax in this way does not apply here. Because this difference in interpretation between Germany and the Netherlands leads to cases of double taxation (which can only be resolved in the framework of a mutual agreement procedure) the Netherlands has agreed to include the German interpretation in the wording of treaty. This means that for the application of other treaties which do not lay down a split interpretation such as this, the Dutch interpretation remains the same, i.e. that there is no split in the right to levy tax. 

Finally

It is expected that the House of Representatives and thereafter the Senate too, will give their tacit approval for the amending protocol. It is also expected that the entire ratification process in Germany will be completed before the end of this calendar year, following which the amending protocol will enter into force on 1 January 2026.