Tax treatment of cross-border workers

If you cross a border to work in another country, both your home country and your work country may claim the right to tax your income under their respective laws. That means there is the potential for double taxation.

However, the tax regime for cross-border workers stipulates that your wages are only taxable in your country of residence.

Other types of income you may earn are taxed pursuant to the applicable tax treaty.

Under labour legislation, cross-border workers have access to the same social and tax benefits as nationals, as well as access to healthcare. They are subject to the laws of the place of performance of the employment contract. For example, if you live in France and work in Belgium, you are subject to Belgian labour laws (as opposed to an expatriate working for their employer abroad but whose employment contract is established in France).

As a cross-border worker, you can keep your French social security coverage while also having basic coverage in your country of work.

Every country has a different definition of what constitutes a “border region”.

The countries covered by France’s cross-border tax regime are Germany, Switzerland (except for the canton of Geneva), Italy and Spain. There is no longer a cross-border regime between France and Belgium (see below).

For more information, see the international tax treaties available on impots.gouv.fr.

Switzerland

Switzerland is a confederation in which each canton sets its own tax rules. Whether you owe taxes in Switzerland or France depends on the canton in which you work.

Border region in France: no distance limit

Border region in Switzerland: cantons of Berne, Soleure, Bâle-Ville, Bâle-Campagne, Vaud, Valais, Neuchâtel and Jura

If you work in the canton of Vaud, Valais, Neuchâtel, Jura, Berne, Bâle-Ville, Bâle-Campagne or Soleure, you will be taxed in your country of residence (France for French residents), unless: you are a Swiss national and you are employed in the public sector; or you reside in the canton during the week or you make more than 45 overnight stays in Switzerland per year. In such cases, your income will be taxed at source in Switzerland.

If you work in Geneva or in any other Swiss canton, you will be taxed in your country of work (Switzerland).

As from 1 January 2008, a certificate of residence for tax purposes (form 2041‑AS) has been required by the French and Swiss tax authorities. Once duly completed by you and your local tax office, it is to be provided to your employer at the time of hiring. Without this certificate, your employer will withhold tax at source from your pay.
 

Belgium

On 12 December 2008, an amendment to the tax treaty between France and Belgium was signed in Brussels, changing the tax regime applicable to wages and salaries earned by cross-border workers. If you became a cross-border worker on or after 1 January 2012, the cross-border tax regime does not apply to you and you must pay taxes in Belgium.

If you became a cross-border worker before 1 January 2012, the cross-border regime will continue to apply and you can continue paying your taxes in France until 2033, provided:

  • Your permanent residence remains in the French border region until 2033, without interruption

  • You work in the Belgium border region

  • You do not work outside the Belgian border region more than 30 days per year

You are considered a cross-border worker if you work in the Belgian border region and live in the French border region. The border region includes all towns/cities either fully within 20 km of the French-Belgian border (as measured by a straight line) or intersected by this 20-km limit on either side.

For the cross-border tax regime to apply, your permanent residence must be in France and you must not have had your permanent residence in Belgium on 31 December 2008.

Germany

In principle, cross-border workers are subject to tax in only one country: their country of residence, provided they are recognised as a cross-border worker.

To be considered a cross-border worker:

  • You must reside in Alsace (département 67 or 68) or Moselle (département 57)

  • You must work for a German private-sector company

  • The company must be located in the border region (within a straight 30-km line from the French-German border)

  • You must return home at the end of each workday (with an allowance of up to 45 workdays/year)

If you are considered a cross-border worker, your income is taxable in France (i.e. you are considered a tax resident of France). However, since your German employer will make payroll deductions (tax withholding at source), you will need to apply for a waiver using form 5011, to be completed by yourself and your employer in triplicate:

  • One copy to be filed with the local tax office in France

  • One copy to be filed with the German tax authorities, which will validate it and issue your waiver

  • One copy for your records

Italy

If you are considered a cross-border worker, you are liable for tax in your country of residence and not the country of the source of your income, as an exception to the general principle for the taxation of wages and salaries.

The border region includes the regioni of Italy and départements of France located along the border. On the French side, this is Haute-Savoie, Savoie, Hautes-Alpes, Alpes, Alpes de Haute-Provence, Alpes-Maritimes and Corse du Sud. On the Italian side, this is Valle d’Aosta, Piemonte, Liguria and Sardinia.

Spain

In principle, the border region extends 20 km on either side of the French-Spanish border.

Under the tax treaty between France and Spain, cross-border workers are issued a card to prove their status. They are only liable for tax (on wages, salary and other employment income) in their country of residence.

 

UPDATED DINR-PART on AUGUST 20, 2021

 

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