Global menu

Our global pages

Close

Coronavirus – Austria and German agreement on tax treatment of home office working - Germany

  • Germany
  • Tax planning and consultancy

22-04-2020

In line with the Federal Ministry of Finance's press release dated 3 April 2020, Germany and Austria have concluded a mutual agreement for Covid 19-related home office activities on 15 April 2020, which relates to the application of the Double Tax Treaty (DTT) between Germany and Austria (dated 24 August 2000):

  • concerning COVID-19 related home office activities, each activity is deemed to have been performed in the contracting state in which the employee would have carried out his or her activity without the COVID-19 -pandemic
  • Example: Where an employee, who usually lives in Germany and works in Austria, has to work in his home office in Germany due to the COVID-19 -pandemic, his activity is deemed to have been performed in Austria
  • this exemption rule only applies to COVID-19 -related cases. It does not apply if the employee works generally in his home office in accordance with the provisions under his employment contract
  • the remuneration relating to home office activities must be taxed in the respective, where the employee works (“state of activity”) to be exempt from taxation in the country, where the employee lives ("state of residence")
  • if the employee wishes to apply this exemption rule and accordingly notifies the employer and the competent tax office of the state of residence, he must document the circumstances (in particular the number of working days on which the employee works from home due to the COVID-19 -pandemic) must be documented by the employee and disclose it together with a confirmation of the employer

In this respect, a set of rules has been implemented by the mutual agreement between Germany and Austria of 15 April 2020 which is comparable to the recent Corona related agreements for cross-border commuters between Germany and Luxembourg (dated 3 April 2020) and the arrangement between Germany and the Netherlands (dated 6 April 2020) (see previous newsletter).

Daily cross-border commuters between Germany and Austria

In principle, the classification as a cross-border commuter within the meaning of Article 15 para. 6 of the DTT between Germany and Austria requires that the employee returns to his home in his state of residence on a daily basis. If the employee performs activities in the state of residence, such days are generally classified as "days of non-return". If the days of non-return exceed 45 days within the framework of an employment relationship with a duration of at least one year, he would no longer classify as cross-border commuter for the entire year. Consequently, he would be taxed in his state of residence.

However, deviation from this general rule, the working days on which cross-border commuters work from home due to the measures taken against the spread of the Covid 19-pandemic will not be deemed days of non-return pursuant to the new arrangement between Germany and Austria.

COVID-19 commuter measures: period of validity

These provisions apply initially to activities performed between 11 March 2020 and 30 April 2020 and will be extended by a month, respectively, unless the agreement will be terminated by a contracting party at least one week before the beginning of the following calendar month.

Further information for cross-border commuters

Press release of the Federal Ministry of Finance dated 03 April 2020

Arrangement reached by consultation between Germany and Austria dated 15 April 2020