How different European countries tax working from home

A man working from homeWhen it comes to the tax implications of working from home, Belgium seems to be the most attractive European country. Those regularly working from home in Belgium can claim over €1,700. No other of the eleven nations examined by The Mobile Bank N26 manages to match the Belgians in this regard. In addition to Germany’s neighbour, Spain, Italy, Ireland, the Netherlands, Germany, Austria, Portugal, Greece, Poland and France were also analysed. As the data suggests, regulations and tax relief opportunities differ between nations, sometimes significantly.

With the COVID pandemic, laws for employees who work from home have been adapted across almost all countries. In Belgium, employers may grant work from home employees a lump sum of 142.95 per month, adding up to a yearly total of €1,715.40. This tax-free addition to the employer’s salary makes Belgium the nation where employees can get the highest refunds across all included countries. To qualify, employees are only required to work one full day per week at home and are even allowed to divide their time according to their individual preferences.

Ireland, in comparison, handles things a bit differently. Here, costs incurred during work from home are compensated on a per diem basis. Employers may grant a tax-free daily lump sum of €3.20 on top of regular salaries. Assuming a standard of 230 working days per year, this adds up to a total €736. Regarding per diem rates, Germany lets taxpayers reclaim a solid €5, but the annual cap of €600 total means that those who permanently work from home still receive less than their Irish counterparts at the end of the year.

As a result, Germans may only claim roughly half of all working days in a year (120 days) for tax purposes. There is also a notable difference regarding the process. German taxpayers need to reclaim their money through their tax declaration at the end of the fiscal year.

Among the other analysed countries with similar regulations are:

  • France (annual amount: €580),
  • the Netherlands (€2 per diem, annual amount for 230 working days: €460),
  • Greece (annual amount: €336)
  • and Austria (€3 per diem, up to a maximum of €300).

Individual agreements are still necessary in these countries – for now

In four of the eleven nations analysed, lump sum regulations do not yet exist or must be individually negotiated directly with the employer. In Spain, companies are encouraged to voluntarily take responsibility for compensating employees, though there currently are no specific tax refund regulations in place. Yet, the employer is legally obliged to provide or cover all costs for any equipment and tools necessary for remote workers to successfully accomplish their jobs.

Portugal and Italy also don’t provide any legally binding regulations as of now. Nevertheless, there are still some possibilities for employers to compensate their employees for certain expenses resulting directly from working at home. Without the legal framework, however, this remains based on individual agreements between employees and their employers.

Meanwhile, the government in Poland is actively working on changing existing laws to provide more tax relief to remote employees. Currently, the decision to reimburse work from home is still up to each individual employer and is not obligatory in any way. However, an amendment to labour laws is expected as early as Fall of this year. Reimbursing remote workers for electricity, telephone and internet costs may then indeed become mandatory for employers. Even a lump sum regulation is a possibility.

Image: Sedus