French cross-border workers in Belgium. What are the tax consequences?
For French residents who live in the border region and come to work in Belgium, there is a special regime under the Non-residents Tax for Persons system. Normally, French residents would be taxed in Belgium but the exception regime means that their Belgian income is only taxed in France and the Belgian employer (e.g. a company from Ypres that employs a French woman with permanent residence in Lille) does not have to deduct any withholding tax from the salary. However, social security contributions are due. For the French employee, this is the best of both worlds: more favorable tax regime in France and more favorable social regime in Belgium.
30-day rule
One of the conditions for French people who want to benefit from this system is that a maximum of 30 days per year can be worked outside the border region. If this is the case in two different years (not necessarily consecutive years), the cross-border worker status is definitively lost. To calculate the 30 days, one looks at the activity outside the Belgian border region, the activity in France or in any other country.
Another condition is having a permanent residence in France; to verify this, we look at the facilities and the place where the family lives.
Transitional rule
The regime has been extinct since the conclusion of the Amendment (update, annex) to the Double Tax Treaty between Belgium and France (December 12, 2008). A transitional regime is provided from 2012 to 2033 whereby only employees who already enjoyed the benefit of the cross-border workers regime at the end of 2011 can continue to enjoy it.
New treaty
The negotiations for a renewed Franco-Belgian double tax treaty ended in 2021 and we are now looking forward to a parliamentary approval of the final text. In the new version, the arrangement as stipulated in the Amendment would remain intact.
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