A French cross-border worker teleworking from home comes up against two rules that have nothing to do with one another:
- a tax threshold of 34 days, laid down by the France–Luxembourg treaty;
- social security thresholds expressed as a percentage of working time.
Confusing the two is the most frequent mistake, and one of the most costly in payroll terms.
On 24 June 2026 the Luxembourg direct tax administration published a new circular setting out how the tax threshold is to be applied in practice. This is a good moment to put each counter back in its place.
I. Two separate counters, two different logics
The first counter is a tax counter. It determines in which State the salary is taxable and is measured in days: 34 per taxable period.
The second counter is a social security counter. It determines which social security scheme the employee belongs to and is measured as a percentage of total working time, with thresholds at 25% and 50%.
An employee can therefore remain 100% taxable in Luxembourg while his or her reporting position changes on the social security side, or the other way round. The two analyses must be carried out separately, and documented separately.
| Counter | Unit of measurement | Thresholds | What is at stake |
|---|---|---|---|
| Tax | Days worked outside Luxembourg | 34 days per taxable period | Allocation of the right to tax the salary |
| Social security | Percentage of total working time | 25% and 50% | Determination of the applicable legislation |
II. The 34-day tax threshold: what the treaty provides
The treaty of 20 March 2018 between the Grand Duchy of Luxembourg and the French Republic sets out the usual principle in its article 14: income from employment is taxable in the State of residence.
But where the activity is carried on in the other State, it is taxable in that other State, that is to say where the employment is actually exercised.
Point 3 of the protocol annexed to the treaty, as amended by the addendum of 7 November 2022 applicable since 1 January 2023, introduces a tolerance.
A resident of one State who is employed in the other State and who, during a taxable period, is physically present in their State of residence or in a third State to carry out their employment for one or more periods not exceeding 34 days in total, is deemed to have exercised their employment in the other State for the whole taxable period.
Translated into employer language: as long as a French cross-border worker does not exceed 34 days of work outside Luxembourg in the year, the whole of the salary remains taxable in Luxembourg. The circular expressly states that cross-border workers are the primary target of this provision.
Two clarifications matter. First, the counter is not limited to working from home: days worked in a third State, for example during a business trip, also count towards the 34 days.
Second, the threshold is assessed per taxable period, that is calendar year by calendar year, with no carry-over from one year to the next.
III. What happens beyond 34 days
Where the threshold is exceeded, the tolerance ceases to apply and the right to tax is allocated between the two States according to the days actually worked outside Luxembourg. The circular illustrates this mechanism with several worked examples, for Article 14 as well as for Article 18.
In practice, this means that an employee who reaches 40 days outside Luxembourg does not lose the whole benefit of the treaty, but the portion of remuneration corresponding to those days becomes taxable in France.
This triggers reporting obligations on both sides of the border, and assumes that the employer is able to substantiate the count.
It should also be borne in mind that the tolerance applies subject to any provision to the contrary in another double taxation treaty concluded by either of the two States.
Days worked in a third country must therefore be analysed in the light of the treaty applicable to that country.
IV. A special case: the public sector
The addendum of 7 November 2022 introduced a similar tolerance rule in article 18, which deals with remuneration paid in respect of public functions.
Remuneration paid by a State remains taxable in that State where the services are rendered in the other State or in a third State for a period not exceeding 34 days in total per taxable period.
Watch out, however, for the exception in paragraph 1(b) of article 18: where the services are rendered in France by a person who is both a French resident and a French national, without also holding Luxembourg nationality, the remuneration becomes taxable in France.
This point directly concerns Luxembourg public sector staff residing in France.
V. The social security side: the telework framework agreement
On the social security side the reasoning is completely different. The purpose of the European framework agreement on telework is to allow the employee to remain covered by the scheme of the employer’s country. The Luxembourg Joint Social Security Centre sets out the conditions, which must all be met.
- It must be an employed activity: self-employed workers are not covered by the framework agreement.
- Telework must represent between 25% and less than 50% of the employee’s total professional activity.
- The employer’s Member State and the employee’s Member State of residence must both be signatories to the framework agreement.
- Telework must be carried out exclusively in the employee’s Member State of residence.
- The employee must have no other habitual activity outside the one exercised in the employer’s Member State.
- A connection to the employer’s IT infrastructure must exist.
Outside that framework, that is where regular telework represents less than 25% or 50% or more of working time, the situation falls under Article 13 of Regulation (EC) No 883/2004 on the pursuit of activities in two or more Member States, in other words multi-State activity.
The definition of working time holds a surprise for many employers: working time covers any period during which the employee is at work or at the employer’s disposal, sick days included.
Paid holidays, by contrast, are not treated as working time.
VI. The employer’s reporting obligations
The declaration must be filed by the employer or its agent, whatever the telework percentage, electronically via SECUline using the DEMDET procedure, or failing that on the paper forms provided by the Joint Social Security Centre.
Where the framework agreement applies, an A1 certificate is issued automatically for the whole declared period, which may not exceed three years.
In a multi-activity situation, the issue of the certificate depends on the decision of the competent institution in the employee’s State of residence, which lengthens timeframes appreciably.
Since 1 July 2024, the retroactivity of the declaration has been limited to three months, and the employee must have been affiliated to Luxembourg social security throughout the declared period. In other words, a late correction can no longer catch up a whole year.
Two habits limit administrative friction. First, declare a forward-looking period of at least twelve months, or the longest possible, rather than multiplying declarations.
Second, re-declare immediately any change of situation: a move to another country, a change in teleworking time, taking up or giving up another professional activity.
VII. What the employer needs to put in place
The practical consequence of these two counters is that an informal verbal arrangement on telework is no longer enough. A monitoring system able to withstand an audit is required, on both sides of the border.
- Keep a named, dated record of days worked outside Luxembourg, separating home working from third States.
- Formalise a telework policy setting a cap on days consistent with the chosen tax and social security thresholds.
- Check the percentage declared to the Joint Social Security Centre, calculated on a monthly average and declared as a whole number.
- Schedule a mid-year review, before the 34-day threshold is reached inadvertently.
- Anticipate the impact on the payslip and on wage tax withholding in case of overrun, rather than correcting at year-end.
Conclusion
The circular of 24 June 2026 does not change the 34-day threshold: it clarifies its application and replaces a text that had become obsolete.
The real challenge for Luxembourg employers remains managing two independent counters, one in days and the other as a percentage, never assuming that one protects the other.
A clean day count, a written telework policy and an up-to-date declaration with the Joint Social Security Centre are enough, in the vast majority of cases, to secure the position of both the employee and the employer.
Need support on this topic? Discover our payroll & HR administration service in Luxembourg or get in touch with Ease Advisory.