AGEFI Luxembourg - Juillet Août 2020 - édition gratuite

AGEFI Luxembourg 40 Juillet / Août 2020 Emploi / RH Human Capital Europe 2020 End of the lockdown: Make it safe … from a tax and social security perspective too! ByEricCENTI,Partner,FredericSCHOLTUS, Director and Gregory JULLIEN, Senior Manager at Deloitte Luxembourg I n the face of theCOVID-19 out- break, businesses all around theworldhad to implement soundbusiness continuity pro- grams to continue operations des- pite the lockdown imposedby the relevant authorities.While diffe- rent temporarymeasureswere en- acted to relax standard tax and social security rules during the lockdown, it is essential that, as COVID-19measures are being progressively lifted andbusinesses start organizing their gradual re- turn to the office, we continue to keep inmind the issueswemay face. This is especially true for Luxembourg businesses, which rely on a growing cross-border worker community and are used to running their operations on an in- ternational landscape. While personal tax and social security aspects remainhigh on the agenda To protect the population of remote- working cross-border employees sud- denly exposed to potential double taxation and/or a change in their social securitystateofaffiliationiftheyexceeded certain thresholds (1) , the Luxembourg governmenttookimmediateactiontorec- ognizetheexceptionalcharacterofthecri- sis, whichwas acknowledgedglobally as “cas de force majeure” by the interna- tional tax business community and the EUsocial security authorities. Thanks to this commonandglobalmind- set, Luxembourg was able to set up ami- cable mutual tax and bilateral social security tools, aimedat preventingpoten- tialdoublepersonaltaxationand/orsocial security issues for staff forced to work fromhome due to government decisions of Luxembourg (their state of work) and/or their respective state of residence (Belgium, France or Germany). The proper application of these agreements must be checked on a case-by-case basis, as they are limited in time and subject to the fulfillment of specific conditions that are not always fully known (2) . On the em- ployee’sside,thisrequiresadditionaleffort and discipline to regularly deliver their work schedule to their employer. While, on the employer’s side, it is necessary to checktheappropriatenessofemployment activitiesperformedabroad(i.e.,nosigna- tureofcontractcompletedbyanemployee fromabroad),maintainproperdocumen- tationofworkingactivities in/out of Lux- embourg during/after the crisis, and to know whether these activities were per- formed from the employee’s home office or elsewhere. In that respect, it must be noted that pri- vateexpensesincurredbythecross-border employeeforhishomeworkingactivities, and/orfortheacquisitionofspecifichome officeequipment,remainsmostofthetime left at the sole discretion of the employee. This allows the employer to stay on the safe side and be able to demonstrate, in linewithOECDguidelinesonpermanent establishment(PE)andmitigationaspects, thattheemployee’shomeofficewouldnot be seen as a location permanently avail- able to the employer. Furthermore, employers should remain laser-focused on identifying exceptional cases that are more likely to trigger per- sonal tax and social security issues (i.e., employees taking special leave, part-time employees, vulnerable workers who are unable to work from the office for longer periods,etc.)andonthespecificsofcertain tax treaty provisions that apply to newly implemented working-from-home poli- cies. Properlymanaging thesenewwork- ing-from-home standards requires long- termefforts andbest practices tobemain- tained; not just during but, most importantly, after the COVID-19 crisis, when the currently applicable tolerance/ amicable agreements onpersonal tax and social securitywill no longer be relevant. Corporate tax aspects should not be underestimated These significant changes to the normal course of business also exposed Luxem- bourg businesses to corporate tax chal- lengesandpotentialdouble-taxationrisks with the neighboring states of theGreater Region,astheirLuxembourgnon-resident cross-border employees worked from their home offices. Under the usual inter- nationaltaxrulesandincertainconditions, such situations may indeed create a tax- ablepresenceforLuxembourgbusinesses intheseneighboringcountriesthroughthe tax concept of fixed place of business or per- manent establishment . This, in turn, would lead to corporate tax charges imposed by the French, Belgium or German tax au- thorities on the portion of profits attribut- able to such a permanent establishment. The situation could be worse still in cases ofeffectivemanagementofaLuxembourg companybeingexercisedinaneighboring country (e.g., functions exercised by non- Luxembourg resident executive/non-ex- ecutive directors.) The relevant tax authoritiesmayconsiderthecompanyhas become resident in its jurisdiction and, therefore, claim that the company should besubjecttolocalcorporatetaxationinfull in this other Greater Region state. Under thesecircumstances,Luxembourgcompa- nies would face a significant administra- tive burden and a potential double-taxation situation with the same profitsbeingtaxedtwice—firstinLuxem- bourg and then in the other neighboring state. The views of these foreign tax au- thorities may diverge from those held by the Luxembourg corporate taxpayer and also the Luxembourg tax administration. The COVID-19 measures put in place throughoutEuropecreatedanimmediate corporate tax risk for Luxembourg com- paniesinlightoftheinternationaltaxrules. Thankfully, the OECD reacted swiftly to clarify the impact of the COVID-19 crisis on the application of international tax treatiesgoverning taxing rights (3) .Accord- ingtothisstatement,theCOVID-19meas- ures taken during the outbreak are exceptional (“ force majeure ”) and should normallynotaffectthetaxationofcompa- nies under the relevant tax treaties. The countries of theGreaterRegionexpressed similar views during the crisis. The time has come to relaunch the econ- omyand societybyprogressively easing the COVID-19 measures. Non-resident cross-border workers will gradually re- turn to the office and team rotationmay be implemented.Without adoubt, some of these workers will have to (and even want to) continue towork remotelydur- ing the summer periodandprobablybe- yond, as social distancing and other security measures would continue to be needed. In fact, BelgiumandFrancehave confirmed that Luxembourg non-resi- dent cross-borderworkerswill be able to continue to work from home at least until the end of August 2020, without being subject to personal income tax in their country of residence in principle. For Germany, the amicable agreement has beenextendeduntil 31 July 2020 and is subject to potential future extension. Until things return to normal, this tran- sition period will, without any doubt, create agreyareaof great taxuncertainty for taxpayers as it is no longer a clear cut situation. AsMemberStateswillstrugglepost-crisis to find the sufficient tax revenues to repay debts incurredduring the crisis, the coun- tries neighboring Luxembourg may be tempted to challenge the taxation of Lux- embourgbusinessesand/ornon-resident cross-borderworkersworking inLuxem- bourg to generate new tax revenue. The risks of double taxation for Luxembourg businesses and non-resident individuals working in Luxembourg is increasing, which, overall, would be detrimental to the recovery and growth of the European Union economy at large. A cautious and proactive tax attitude would certainly be to check the resilience of your operating business and take ap- propriate steps towards an accomplished “make it safe” approach! 1) Based on the EU social security regulations, cross- bordercommutersworkingforaLuxembourgemployer should be affiliated to the Luxembourg social security system if less than 25%of their working time (or remu- neration)ina12-monthperiod(hereafter“the25%thres- hold”)isperformedintheirstateofresidence.Inprinciple, homeworkingiscountedasworkingactivityinthestate ofresidence;therefore,itistakenintoaccountinthe25% threshold calculation. Due to the current highly excep- tional circumstances, some employees may be at risk of exceeding the 25% threshold. In this case, the employer and the employee would be required to register with the home country social security authority, and very likely remit higher social security contributions according to thehomecountry’sapplicablerates.However,asworking fromhomeduetotheCOVID-19outbreakcanbeconsi- dered as an exceptional situation (“force majeure”), it, therefore, does not count towards the 25% threshold duringtheworkingperiodagreedbetweenLuxembourg andeachoftheneighboringstatesoftheGreaterRegion. Thisexceptionalpositiononsocialsecurityremainsappli- cable until further notice and is expected to be extended until 31August 2020. 2)Eitherbythepublicatlargeorthecontenthasnotyet been publicly provided, in the example of the amicable tax agreement concluded between France and Luxembourg. 3) OECD, 3 April 2020, “Analysis of Tax Treaties and the Impact of the COVID-19 Crisis” (reference docu- ment, PDF): 127_127237-vsdagpp2t3&title=OECD-Secretariat-analysis-of- tax-treaties-and-the-impact-of-the-COVID-19-Crisis L a deuxième éditionduHumanCapital Europe, se déroulera le 26 novembre prochain, auEuropeanConvention Center Luxembourg (ECCL). Cette année, celui-ci se composera d’une sessiond’ouver- ture sur les leaders de demain, duHRSum- mit, Healthcare Summit, des cérémonies des LuxembourgHRAwards et des Luxembourg HealthcareAwards. En effet, dans le contexte particulier et suite à la pandémie deCovid-19 qui a bouleversé nos habitudes, Farvest a souhaité réunir deux événements se consa- crant à l’humain : une décisionqui s’inscrit dans la volonté demettre envaleur les pro- fessionnelsRHet de la santé, pour leur enga- gement extraordinaire en cette période. Conférences : entre leadership et innovation L’événementdébuterapar unesessionintitulée“The leaders of tomorrow are not the ones you expect” : lesexpertsprésentsdiscuterontdesnouveauxmodes de fonctionnement des sociétés, partageront leurs bonnespratiquesentermesdegestiondecriseouen- core s’intéresseront auxprofils atypiques et comment le recrutement de ces derniers peut être bénéfique pour les sociétés. C’est tout d’abord Alex Stani- forth (MotivationalKeynoteSpeaker,Author,Ambas- sador & Director, Mind Over Mountains) qui interviendra. Le jeune aventurier britannique revien- dra sur les challenges de la vie auxquels nous faisons face, et à la meilleure manière d’y répondre en abor- dantsuccèsetéchecsainsiquelanécessitédesortirde sa zone de confort. ClaudiaKessler (Initiatorofthe1stfemaleAstronaut, Astronautin) s’intéressera, quant à elle, à la résilience, à la gestion du stress face à la crise, puis aux points communs entre astronautes, CEOs et DRHs. Enfin, Emmanuelle Joseph-Dailly (Author, Speaker et contributrice de Business Harvard Review) se pen- cherasurlesprofilsimpertinents:pourlesentreprises etleursdirigeantsdoivent-ilsmisersurdesprofilshors normes – dits «impertinents» ? Comment ce pari sur cette «compétence» peut-elle changer le mode de fonctionnement d’une organisation ? Le HR Summit 2020 aura quant à lui pour théma- tique “HR Reloaded” . La singularité de la période quenous vivons actuellement nous invite à redéfinir nos habitudes, nos pratiques, nos valeurs. Dès lors, comment aborder cette nouvelle ère ? Comment les RH peuvent-elles apprendre de cette situation ? Les intervenants traiteront alors de la transformation di- gitale du secteur (qui a connu une forte accélération tout en se réajustant, durant la crise sanitaire), d’en- gagement et demotivationdes employés (entre stra- tégie people, télétravail et retour au bureau), ou encore du besoin accru d’agilité du secteur des res- sources humaines. Ce sommet RHréunira notamment ThomasMøller Lybæk (HR Process Innovation Director at LEGO Group), RosieEvans (BehaviouralScientistatCoach- hub) et MichelleMills-Porter (Expert inHumanBe- haviour). Cette dernière, professionnelle reconnue dansledomainedumarketing,anotammentsurvécu auTsunami de décembre 2004 qui a touché l’Asie du Sud-Est. Elle s’est alors spécialisée dans le comporte- menthumainetsoutientdenombreusesassociations. Al’occasionduHRSummit,elles’intéresseratoutpar- ticulièrement à la motivation, aux valeurs humaines et à la résilience. Les LuxembourgHRAwards Remis lors duGalaHROne, qui clôturera leHuman Capital Europe, ces prix récompenseront les meil- leures initiatives RH locales et bonnes pratiques, tout enparticipantàl’émulationd’unsecteurenperpétuel mouvement. Celui-ci a tout particulièrement dû s’adapter à la crise sanitaire cesderniersmois, et a fait preuve d’une forte innovation et créativité. Cette année, 9 awards seront donc distribués aux profes- sionnels luxembourgeois, après que ceux-ci aient pit- chés leurs projets et initiatives à un jury d’experts. Cette année, un prix exceptionnel sera remis dans la cadre de la résilience face auCovid-19 : - Extraordinary HR Support : ce nouvel award ré- compense une initiative menée durant la crise du COVID-19 qui a aidé les employés au sein d’une so- ciétéetquiaprouvél’agilitédecelle-ciainsiquesaré- silience face à la crise. - PeopleExperience : ceprix récompense la stratégie, voire la philosophie, visant à améliorer l’expérience employés, durant toute la relation employeur-em- ployé,etquiimpactealorspositivementl’attractionet la rétention des talents, le bien-être, et même la satis- faction client. - OnboardingExcellence :unawardquirécompense la meilleure stratégie d’intégration et de socialisation des nouveaux talents, ainsi que les projets et process en place afin de faciliter l’acquisition de nouvelles connaissances et de la culture d’entreprise. - EmployerBrandof theYear : ceprix récompense la stratégie de communication RH liée au développe- mentdelamarqueemployeur,regroupantainsilacul- ture, la réputation, la proposition de valeur pour les candidats, employés et alumnis. - Talent & Competence Management : l’award ré- compense l’approche holistique de «Talent Manage- ment» d’un département RH - détection, analyse et développement – ayant pour but de créer toujours plus de valeur pour la société. - Income & Reward Strategy : un prix qui récom- pense la meilleure politique RH en termes de «com- pensation&benefits», qu’ils soient financiers ounon, ainsi que la stratégie visant àmotiver et récompenser l’engagement - et la performance - des salariés. - HRManageroftheYear :cetawardrécompenseun leader «capital humain»ausens largedu terme, pour sa stratégie et projets, et leur alignement avec la stra- tégieglobaledel’entrepriseetlesautresdépartements. UnpartenaireprivilégiéduCEOetdesleadersdel’en- treprise, sa contributionà laperformance collective, à l’innovation et au bien-être des employés, influence clairement l’image de la société. - CSRInitiative of theYear : unprixqui récompense uneinitiativeESR(droitshumains,santé,bien-être,di- versité, égalité homme-femmes, mobilité, etc.) confé- rant une valeur ajoutée à l’entreprise et à la société de manière générale. - HR Digital Transformation : ce prix récompense unestratégieRHayantpermisdetransformerunbu- siness traditionnel en une approche et un manage- mentbasésurlesdonnées,ainsiquepoursonsupport aux équipes durant cette période de transformation. Healthcare Summit : quand la collaborationnourrit l’innovation En parallèle du HR Summit se tiendra une nouvelle édition du Luxembourg Healthcare Summit . Les professionnels présents se pencheront sur la théma- tiquesuivante “AftermathofaCrisis:whencollabo- ration fosters innovation” . Cette conférence, avec la participation de plusieurs experts locaux et interna- tionaux, permettra de revenir sur les différentes formesdecollaborationscross-secteurayantfaitémer- gerdessolutionsinnovantesetinspirantesdansledo- maine de la santé. «En traitant cette thématique, nous souhaitionségalementaborderlesnotionsdegestiondecrise, de solidarité, d’engagement, mais aussi d’effort collectif, qui sonttoutesprimordialesdanscecontextesiparticulier» ,ex- pliqueAnne-LorraineReinbolt, ProjectManager. Puis, l’événement se clôturera avec la traditionnelle cérémoniedes LuxembourgHealthcareAwards ,qui metenavantlesmeilleuresinitiativeslocalesainsique les bonnes pratiques du secteur. Cette année, 8 prix seront distribués : Extraordinary Business Adapta- tion , Advanced Healthcare Solutions Award , Healthcare Consulting Award , Patient Experience Award , BestHealthcareEducativeCampaignofthe Year , HealthcareFacilitiesAward , OutstandingCon- tribution to theHealthcare Sector & HealthcareRe- searchAward . Plusd ’