On 22 December 2023, the Luxembourg parliament adopted the law ratifying the Protocol amending the Double Tax Treaty between Luxembourg and Germany (the “DTT”), as agreed and signed on 6 July 2023 in Berlin (the “Law”).
The requirements for the entry into force of the above-mentioned Protocol, having been fulfilled on 29 December 2023, said Protocol entered into force in respect of both States on that date.
For more information regarding the amendments made to the DTT, please refer to our newsletter dated 16 October 2023.
In this context, on 11 January 2024, the competent authorities of both States signed a mutual agreement pursuant to consultation, which provides additional clarifications regarding Articles 14 (income from employment), 17 (pensions, annuities and similar remunerations) and 18 (public functions) of the DTT.
Some of the clarifications provided are very useful in practice, notably for the cross-border workers and state employees. For instance, it is clarified that:
- days on which working hours are reduced also count as full workings days;
- the de minimis limit of 34 working days per calendar year, prescribe in Article 14(1) of the agreement, also applies to part-time work and work carried out only during part of the year. In these cases, there is no proportional reduction in the de minimis limit of 34 working days;
- A shift which begins on a working day and ends on the following calendar day (e.g. from 8 p.m. to 6 a.m. the following day) does not give rise to an additional working day to be taken into account for the de minimis threshold.
- With regard to payments from a Luxembourg source, partial unemployment (chômage partiel), sick pay in the event of incapacity for work, as well as continued salary in the event of maternity leave, leave for pregnant women and adoption leave in the event of the adoption of a child, are considered to be social security benefits within the meaning of Article 17(2) of the DTT.
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