Compensation payments to cross-border workers improved
After months of delay, the Belgian government issued a Royal Decree in June 1999 that allocates a budget to meet the most urgent demands of cross-border workers. Belgian cross-border workers employed in France or the Netherlands are left with lower earnings than their domestic counterparts because of an unfavourable combination of high social security contributions and high income taxes.
Under the terms of a Royal Decree dated 1 June 1999, the Belgian government has agreed to make payments backdated to 1 January 1999 to cross-border workers in compensation for inequalities in their remuneration compared with other employees. The Decree will be in force initially for three years. Such compensation payments have already been in existence since 1994 for Belgian workers employed in the Netherlands, but the system is now being improved. Wage ceilings have been increased, cross-border workers who started work after 1993 are now included and part-timers covered on a pro rata basis. For Belgians working in France, no system had been in operation, and inequalities have developed gradually over time as a result of the same unfavourable combination of social contributions and high taxes.
The new system applies to those working in France or the Netherlands and who are subject to the Belgian tax code and to the social security system of the country where they are employed.
Cross-border workers who are employed full time for a wage of up to NLG 3,500 per month (Netherlands) or FRF 10,400 (France) will receive BEF 2,000 extra in their gross monthly income. For those earning between NLG 3,500 and NLG 4,500 or between FRF 10,400 and FRF 13,400, the payment amounts to BEF 1,500 per month, whilst for those earning between NLG 4,500 and NLG 7,500 or between FRF 13,400 and FRF 22,300 they amount to BEF 1,000. Above these income levels, no compensation payment is provided. Part-time workers receive a proportional amount. The compensation payment is subject to income tax set at 10.3%.
The new compensation payments have been backdated to 1 January 1999. They will will be paid every sixth month once the worker has submitted an application with background information and official proof of employment and tax status. Because the first payment covers the first half of 1999, the first payment will actually be made in July 1999. Cross-border workers will have the opportunity to apply for the payment over a three-year period.
Although the new regulation alleviates some of the problems, a number of issues remain unresolved: some cross-border workers receive no child allowances in France or the Netherlands. A new law should regulate this situation, although the details are still to be worked out. In addition, a number of tax issues must be resolved.
Overall, it remains a fact that most of the problems typically encountered by cross-border workers are not dealt with at the EU level and remain the province of incremental national legislation. A truly integrated social Europe, in this respect at least, is still to be constructed.