DTA Austria-Germany – New cross-border commuter regulation
With the protocol of amendment of 21 August 2023 to the double taxation agreement between Austria and Germany, the cross-border commuter regulation was revised in order to take account of mobile working in the home office under tax law.
The cross-border commuter rule is a special provision in the Austrian double taxation agreement with Germany (hereinafter: DTA), which ensures that the country of residence of the cross-border commuter has the right to tax the employee income (of the cross-border commuter). A cross-border commuter is therefore a person who
- is resident in a state close to the border and
- has their place of work in the other state near the border and
- returns daily from their place of work to their place of residence.
Cross-border commuter status means that income from employment is taxed in full in the state of residence (the state of domicile) despite the work being performed in the other state. Historically, this was justified – in view of work close to the border and daily commuting – by the greater proximity of the cross-border worker to his country of residence that could be assumed in this case.
In times of home office, however, the main criterion for cross-border commuter status – the “daily commute across the border” – is now becoming a knockout for cross-border commuter status. According to a regulation agreed in a consultation agreement between the two countries, the status of cross-border commuter will only be maintained on condition that no cross-border commuting takes place on a maximum of 45 working days per calendar year or 20 % of the actual working days, i.e. so-called “non-return days”.
However, no border crossing takes place in particular if the employee works from a home office. This leads to the paradoxical result that the cross-border worker provision cannot be applied if the employee works from home on more than 45 working days in a calendar year (or on more than 20 % of the actual working days), although the link to the country of residence is even closer than for a cross-border worker who commutes every working day. According to the general regulation of Art 15 DTA, the taxing rights must subsequently be split between the employer state and the state of residence (so-called “tax split”).
In order to avoid this situation, which is undoubtedly unpleasant for many cross-border commuters who work from home, a new version of Art 15 para 6 DTA was agreed between Germany and Austria on 21 August 2023. Accordingly, working days in the home office should no longer be harmful non-return days. According to the wording of the new provision, cross-border commuters will in future be persons who
- have their main place of residence near the border and
- normally carry out their paid employment in the vicinity of the border.
A corresponding provision was also included in Art. 19, thus extending the scope of application of the cross-border commuter regulation to employees in the public sector.
According to Art IX of the Protocol to the DTA, places “in the vicinity of the border” continue to be municipalities whose territory lies wholly or partly within a zone of 30 kilometres on either side of the border (border zone). The activity is “normally” carried out in the border zone if the person works outside the border zone in whole or in part for a maximum of 45 working days (or 20 % of the actual working days) during a calendar year. As the home office of cross-border commuters is by definition located in the border zone, the new version means that home office days will no longer count as harmful non-return days in future.
The new regulations are due to come into force on 1 January 2024.
The changes made should lead to a significant simplification and more flexibility for both cross-border commuters and their employers in connection with working from home.
It should be noted that the aforementioned cross-border commuter regulations only apply for tax purposes and not for social security purposes.