PrimeGlobal continues to monitor and assess new developments pertaining to the Novel Coronavirus. Keeping our members up to date on the latest information and approach to help reduce risk is a priority. You can find more information on PrimeGlobal's dedicated page HERE> PrimeGlobal member Joanknecht provide information on the tax implications of working from home during the coronavirus crisis.
Because of the current corona-crisis, a lot of employees are working from home and not at the office. Working from home has its advantages, such as not having travel time to the office. Working from home can, however, also have tax consequences for e.g. the travel allowance. Besides, for cross border workers working from home could have specific tax and social security consequences.
Commuting allowance on declaration basis
In case an employee declares his/her commuting travel costs and the employer compensates the commuting travel costs based on these declarations, the employer is not obliged to compensate an employee who has not been commuting from home to work. So, when the employee is working from home, there is no obligation for the employer to pay the commuting allowance.
Fixed commuting allowance
In case you, as an employer, pay a fixed commuting allowance to your employees, you are allowed continuing the payment of the (tax free) commuting allowance in principle for 6 more weeks. If you expect that the employee will work from home long-term, you are allowed to continue the payment of the commuting allowance for the current and the next calendar month. When the employee starts working at the office again, you can pay the fixed commuting allowance as of the first month after the month in which the employee started working at the office again.
Employees working cross-border: possible salary split
Do you have employees that live in another country than where they work? Normally, the salary of the employee is taxed in the country of work. The employee is in that case mostly also covered by the social security system of the country of work.
In case the employees start working from home, a part of the salary might be taxed in the country of residence. In that country the work is physically performed at this moment. In this way a salary split occurs. This means that one part of the salary is taxed in the country of work and one part is taxed in the country of residence. This might have consequences for the net salary of the employees. In addition, it might have consequences for the payroll.
Social security of employees working cross-border
Subsequently, when the employee is working more than 25% of his/her working time in the country of residence because of working from home, the employee might become covered by the social security system of the country of residence in state of the country of work. This might be a non-desired consequence for employee and employer and could also have adverse financial consequences. Therefore, queries have been filed at the Dutch social security authorities (SVB, Sociale Verzekeringsbank) in order to see whether this potential issue can be solved (on a European level).
We recommend anyway to apply for a so called A1/Certificate of Coverage for your employees who live in another country. This certificate shows that the employee is covered by the social security system of the country of work.
Would you like to know more about the tax consequences of working at home for you and your employees? Our specialists are happy to help you.
Joanknecht was founded in 1948 and has been through all cycles of the economy. We uphold the highest standards in professional expertise and customer services. Our successes over the past decades prove that we must be doing something right. At first glance, our package of services seems to have much in common with many other firms. We are convinced, however, that our approach is essentially different. Our objective is to contribute to your success and our firm is equipped to do so. All our employees are dedicated, self-confident and prepared to go the extra mile. Our aim is to help our clients seize their opportunities.Learn more