As of January 1, 2024, new rules on the taxation of supplement payments and overtime will come into force in Luxembourg and Germany. According to current information, supplements for night work, Sunday and holiday work will be considered effectively taxed in Luxembourg. This means that these payments and the corresponding supplements will be taxed in Luxembourg if the work was done there. This is in line with previous tax practice.

The new cooperation agreement of January 11, 2024 provides that wages, salaries and supplements for overtime worked will not be effectively taxed. This means that these wage components are taxable in Germany for German cross-border workers, regardless of where the work is actually done. Even if only one hour of overtime was worked in the entire tax year, a tax return must be declared in Germany. This applies to all wages, salaries and supplements retroactively from January 1, 2024.

This taxation practice is based on an agreement between the ministries. This agreement leads to discriminatory taxation of German cross-border workers and goes far beyond the purpose of a fallback clause, especially in view of the fact that the respective salary parts are also tax-exempt in Germany.

The OGBL opposes any additional financial burden on workers and cross-border workers as a result of these new tax regulations. The financial uncertainty and potential disadvantage for cross-border workers will lead to an intensified shortage of skilled workers, which will have a negative impact on various sectors and the economy as a whole.

The OGBL calls on the Luxembourg and German governments to withdraw this cooperation agreement immediately. Furthermore, the OGBL will immediately initiate discussions with the relevant finance ministries in Germany and Luxembourg.

Overtime must remain tax-free on both sides of the border.

Communicated by the OGBL,
March 20th, 2024