Home office regulations are slowing down Luxembourg's attractiveness as a location!

Home office regulations are slowing down Luxembourg's attractiveness as a location!

The effects of working from home on the attractiveness of Luxembourg for skilled workers is currently a hotly debated topic. Lesseniel reports that the strict regulations for cross-border commuters who commute to Luxembourg from France, Germany and Belgium represent a significant brake on the location. While working from home has become the norm in many European countries, Luxembourg faces specific tax and social restrictions.

In Luxembourg, cross-border commuters who work from home for more than 34 days a year must pay part of their taxes in their country of residence. Anyone who spends more than 50% of their working hours in the home office not only loses their membership in the Luxembourg social security system, but also runs the risk of being fully recorded for tax purposes in their country of residence. These conditions are causing many professionals to consider alternative work locations such as Frankfurt, Amsterdam or Paris, where home office regulations are much more flexible.

Slow adjustment of regulations

The General Director of the Chamber of Commerce, Carlo Thelen, points to slower growth among cross-border commuters. Loud Haufe Generation Z, which places great value on quality of life and flexibility, shows a strong interest in teleworking. These aspects are a basic requirement for them when choosing a job. Political solutions are now required to address the existing challenges. Adjustments to the bilateral tax and social agreements are being discussed to better meet the needs of cross-border commuters.

Luxembourg's competitive disadvantage becomes particularly clear when compared to the regulations in Germany, which allow cross-border commuters to spend up to 49.9% of their working time in the home office from July 1, 2023. This regulation, which allows a return to more flexible working models, is the result of a multilateral agreement signed by Germany and 17 other countries. The cross-border commuter center has been added, that these provisions will apply until July 2028 and will allow professionals to maintain their status and tax benefits.

Challenges in implementation

The specific regulations that apply to cross-border commuters and their home office days are diverse and require intensive discussion. The regulation stipulates that cross-border commuters must spend at least 60 working days per year in their country of residence in order not to lose their tax advantages. From 2024, home office days will no longer count as a return violation, giving cross-border commuters additional flexibility. Nevertheless, careful recording of working hours and return days remains of great importance.

In this context, it is recommended that you seek tax advice in order to avoid misunderstandings and to find the right regulation for your individual needs. Future changes, such as a possible increase in the home office limit to 60%, could increase Luxembourg's attractiveness for skilled workers, but a politically motivated adjustment of the existing regulations is essential.