On 24 March 2021 the Netherlands and Germany have signed a protocol amending the tax treaty. This includes agreements about the tax law on (short-term) social security benefits and on combating tax avoidance.
This protocol adjusts the distribution of taxation rights among certain social security benefits. This includes the so-called “Krankengeld” (sickness benefit) and “Elterngeld” (benefit for parents with young children). This ensures that in all cases the country that provides the social security benefit may also tax it. Certain social security benefits are exempt net income in Germany whereas they are considered taxable income in the Netherlands. The new protocol ensures that these German net benefits are no longer subject to Dutch tax.
In addition, Germany and the Netherlands have included anti-abuse provisions of the so-called BEPS project against tax avoidance. The tax treaty between the Netherlands and Germany now meets the minimum standard of this project.
The protocol itself has not yet been published. The protocol will enter in to force once approved by the Dutch and German governments.