Austria-Germany consultation agreement on COVID-19 related cross-border working

25/05/20

Austria-Germany consultation agreement on COVID-19 related cross-border working

On 16 April 2020, the Austrian Ministry of Finance published a consultation agreement concluded between Austria and Germany. The goal of the agreement is to limit the individual impacts during the COVID-19 restrictions as far as possible for all employees who work cross-border between Austria and Germany.

The consultation agreement entered into force on 15 April 2020 and applies to working days in the period of 11 March 2020 to 30 April 2020, although an automatic extension is envisaged if the agreement is not terminated in a timely manner by either contracting state.

Home office days

As regards the application of Article 15 para 1 of the Austria-Germany Double Taxation Treaty, working days which the employee carries out from a home office solely due to the COVID-19 restrictions will count as working days spent in the contracting state in which the employee would otherwise have carried out the activities. This does not apply to working days, which would have been spent working from a home office irrespective of the restrictions (e.g. based on provisions in the employment contract).

In order to make use of this regulation, the employee must inform both his/her employer and the competent tax office in the state of residence. The circumstances (in particular, the number of working days which the employee spent working from home due to COVID-19) must be disclosed using records kept by the employee with additional confirmation from the employer.

Special regulation for cross-border workers

Special regulations on cross-border working are in place between Austria and its neighbouring states of Germany, Italy and Liechtenstein. If these regulations are applied, the right to tax income from employment remains in the state of residence, even though the activities are carried out in another state. The regulation on cross-border workers with Germany can be applied if the employee does not return to his/her place of residence on 45 days per year or fewer. Home office days count adversely as non-return days. In this regard, the consultation agreement between Germany and Austria envisages that working days spent working from home solely due to the COVID-19 measures will not count adversely as non-return days.

Taxation of short-time working payments

In the event of temporary economic difficulties due to COVID-19, Austria offers the option of introducing subsidised short-time working. Numerous countries have introduced comparable models.

If the place of residence and the place where working activities are usually carried out are different, the question arises which state is responsible for the taxation of short-time working payments.

The consultation agreement of 15 April 2020 envisages that payments of this kind should be treated as statutory social security payments in the respective state. Such payments are therefore subject to taxation in the state which makes the payment.

Authors: Evelyn Kappel & Robert Hunka

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