Good news for frontier workers (tax status) living in France and working in Germany: under certain conditions, overtime worked in Germany may be exempt from income tax in France!
But beware: this exemption is not automatic for everyone.
Here’s what you need to know.
An exemption governed by French law
Since 2019, overtime worked in excess of the legal working week has been eligible under French law for income tax exemption, subject to certain limits and conditions.
However, this exemption is reserved for employees covered by the French Labour Code, as it only applies to hours that also give entitlement to a reduction in social security contributions.
What about cross-border commuters working in Germany?
In principle, an employee working abroad, in a foreign company, is not subject to French social legislation, and therefore cannot benefit from the exemption provided by national law.
However, an exception applies to cross-border commuters, thanks to the tax treaty between France and Germany.
Under Article 13(5) of the Franco-German tax treaty, frontier workers are only taxable in France on their German business income. The French tax authorities have therefore accepted that they can benefit from the exemption for overtime, even if it is worked in Germany (in excess of the legal hour in the country of employment).
Warning: hours worked on Sundays
As regards hours worked on Sundays, it is important to check whether they are considered as overtime under German employment law and the agreements in force in the company.
Only an analysis of the employment contract or collective agreements can confirm this.
Further information can be found on the website of our partner Frontaliers Grand Est
