Home-working arrangement in tax treaty with Germany takes effect

We reported in a previous edition of EY Payroll Tax News  that the Netherlands and Germany had signed an amending protocol to their tax treaty. At that time the protocol still had to be ratified in both countries. We can now confirm that the amending protocol has indeed taken effect from 1 January 2026. 

With the entry into force of this protocol, the Netherlands’ has its first bilateral home-working arrangement. 

The Netherlands and Germany have agreed that cross-border workers may work a maximum of 34 days a year from home in their country of residence without this affecting where the income earned from that will be taxed. Provided 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.

The amending protocol also includes a threshold arrangement for public sector employees (including those working for a body governed by public law) that is comparable to what has been agreed for "regular" (private sector) employees. It states 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 is contrary to the Netherlands’ position on this matter in other tax treaties.

For further details of both topics, you are referred to the EY Payroll Tax News for November 2025.