From 1 July 2023, a new framework for cross-border teleworking will come into force, replacing the transitional period related to the COVID-19 pandemic. This framework, developed in the field of social security, introduces a new declaration requirement for employees engaged in regular teleworking activities residing outside Luxembourg and gives the opportunity to increase the social security threshold to 49%.
Employers should be aware that although this framework agreement represents a considerable step forward in the area of telework, the increase to 49% is only applicable under very specific conditions.
Scope and Conditions for Application
The new framework applies to teleworking activities falling within the scope of the agreement. Only employees who meet the following conditions can benefit from the framework:
- Signatory States: The employer's country of establishment and the employee's country of residence must both be signatory states to the agreement.
- Exclusive Teleworking: The teleworking must be exclusively performed in the employee's country of residence.
- Teleworking Percentage: The teleworking activity should account for 25% to less than 50% of the employee's total working time. If the activity falls below 25%, the usual European provisions regarding coordination of social security apply, and the applicable social security legislation should be determined by the employee's country of residence.
- Infrastructure Connectivity: The employee must have the ability to connect to the employer's IT infrastructure.
- No Other Activity: The employee should not engage in any other activity (employment with the same or different employer, or self-employment) in their country of residence or any other member state.
Signatory Countries
The framework is currently signed by two neighboring countries (Germany and Belgium). The full list of signatory countries can be accessed here.
Retroactivity and Transitional Period
The framework allows for a transitional period until 30 June 2024, during which regular teleworking performed by an employee from 1 July 2023, can be declared. Retroactive declarations can be made up to 12 months, provided the employee was affiliated with the Luxembourg social security system during the entire period.
A. Retroactivity During the Transitional Period (July 1, 2023 - June 30, 2024)
During this period, employers have the opportunity to submit declarations retrospectively, not preceding July 1, 2023, or the date of entry into force of the framework for countries ratifying it after July 1, 2023. Retroactivity is applicable only if the employee was affiliated with the Luxembourg social security system throughout the relevant period.
B. Retroactivity After June 30, 2024
After June 30, 2024, the retroactivity of a declaration is limited to three months, and the prerequisite of affiliation with the Luxembourg social security system during that period remains.
Validity and Renewal
The framework on cross-border teleworking is initially valid for a period of five years and can be renewed for subsequent five-year periods. Signatory states have the option to withdraw from the framework by providing a three-month notice. It is crucial for employers to stay informed about any potential changes or updates to the framework that may impact their employees.
Key points to consider and links to go further
Eligibility
Understanding the eligibility criteria is essential. Employers will have to identify which employees qualify for the application of the framework, taking into account factors such as the signatory states, teleworking percentage, and the absence of other employment activities in the employee's country of residence.
Transitional Period
During the transitional period until June 30, 2024, you may review and retroactively declare teleworking activities performed by employees from July 1, 2023 and ensure that the necessary documentation is gathered and that the retroactive declarations meet the specified criteria.
Future Updates
You might have to keep track of any future updates or changes to the framework.
More information is available by following these links: