Context

As explained in previous headlines, Belgium and France are negotiating a new double taxation treaty and have been since 2003.

A sensitive point of discussion has always been the rules for frontier workers. Frontier workers are currently taxed in their country of residence and not in the country where they work, which generally makes it a beneficial system for French frontier workers working in the Belgian frontier zone.

News

The French and Belgian tax authorities have finally reached agreement on the changes to be made to the French-Belgian frontier workers rules.

For a period of 25 years from 1 January 2007, French frontier workers working in the Belgian frontier area will continue to be taxed in France on their salary income. The same goes for new French frontier workers recruited in 2007 and 2008, but not thereafter.

French frontier workers will also be allowed to work for up to 30 days outside the Belgian frontier area without losing their “French frontier worker” status. This new 30-day rule is a reversal of the strict position taken by the Belgian tax authorities in their practice notes of 25 May 2005 and 11 August 2006, in which they stated that (French) frontier workers lose their frontier worker status immediately they cease to work exclusively in the (Belgian) frontier area.

As regards Belgian frontier workers working in the French frontier area, they will be taxable in France as from 1 January 2007.

It should be stressed that this agreement still needs approval by the Belgian and French parliaments.