Edition January 2026: New Developments at the Start of the Year

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• Law »
• National salary tax​ »
• The Spotlight: The underestimated data protection risk in international assignments: Focus on outgoing data transfers from Singapore »

Tax

Cross‑Border Commuters between Germany and France – Individuals who work in Germany and reside in France, or who reside in Germany and work in France

Anyone responsible for HR who employs staff residing in France in Germany, or staff residing in Germany in France, should be familiar with the specific rules governing cross‑border commuters.

The cross‑border commuter provision set out in Article 13(5) of the Double Taxation Agreement between Germany and France ensures that employment income arising from cross‑border activities is not subject to double taxation. Under this rule, cross‑border commuters pay income tax in their state of residence, even if the employment is exercised in the other contracting state. This applies on the condition that the individual returns regularly to their place of residence (as a rule, on a daily basis).

Both the place of residence and the place of employment must be located within the so‑called border zone. For cross‑border commuters residing in France and working in Germany, the border zone comprises municipalities whose territory lies wholly or partly within 30 kilometres of the border (for commuters residing in Germany and working in France, within 20 kilometres). The municipalities and cities included in the border zone can be found in the circular issued by the German Federal Ministry of Finance (BMF) dated 16 November 2021, published in the Federal Tax Gazette I, p. 2230.

Cross‑border commuters may spend no more than 45 working days per year (so‑called non‑return days) without returning to their place of residence or working outside the border zone. Sick leave, vacation days and public holidays are not classified as working days.

In the case of a mid‑year change of employment or a change of residence into or out of the border zone, the 20 percent rule applies. This means that the number of non‑return days may not exceed 20% of the total working days under the employment relationship(s), but in any event may not exceed 45 days.

If the conditions for cross‑border commuter status are met, the employment income is exempt from income tax and from monthly wage tax withholding. This exemption requires an application to be submitted to the competent tax authority.

Opportunities and challenges

For HR departments, a comprehensive understanding of the cross‑border commuter rules between Germany and France is essential. Only then can payroll processes and social‑security requirements be implemented correctly and in full compliance with the law.

Already during the recruitment process, candidates should be transparently informed about the potential implications of these at times complex rules. It is also advisable to involve an expert in international tax law at an early stage. Equally important is the continuous monitoring of the travel calendars of affected employees in order to identify in a timely manner whether, and to what extent, the cross‑border commuter rules apply or cease to apply.

In this way, companies not only ensure legal certainty and avoid double taxation, but also provide their employees with the greatest possible flexibility and optimal conditions for cross‑border activities.

New NL – DE Tax Treaty Update: Up to Thirty-Four Home-Office days without Cross-Border Tax

Employees working cross‑border between the Netherlands and Germany will in future benefit from greater flexibility when working from home. A recent amendment to the bilateral double taxation agreement allows employees to work up to 34 days per year from their state of residence without altering the tax allocation of their employment income. The aim of this new provision is to prevent double taxation and reduce administrative burdens for both employees and employers.

What has changed?

The Netherlands and Germany have amended their bilateral income tax treaty to better reflect modern hybrid working practices. As of 1 January, 2026, cross-border workers, in both the private and public sectors, may work remotely from their country of residence for up to 34 days per calendar year without triggering a shift in taxing rights. This also applies to working in third countries (unless the bilaterial income tax treaty between the home and this third country allocates the taxation rights to this third country).

A home-office day is defined as a day on which more than 30 minutes of work is performed remotely. Only days on which paid work is actively carried out are counted; vacation days, sick leave, and employer-mandated rest periods are excluded.

Avoidance of double taxation

The amendment is designed to prevent situations of double taxation and to provide greater legal certainty for cross-border workers. Without this rule, even limited remote work performed in the employee’s country of residence could result in partial taxation there. By introducing this change, employment income remains fully taxable in the employer’s country as long as the 34-day threshold is not exceeded.

No unlimited working from home

The agreement does not allow for unrestricted cross-border remote working. Once the 34-day threshold is exceeded, the standard allocation rules under the tax treaty apply. This may result in part of the employee’s income becoming taxable in the country of residence.
Employees and employers are therefore advised to carefully monitor and document the number of remote working days.

The current agreement does not yet address situations where employees work remotely for more than 34 days per year. To address this gap, both governments have signed a joint declaration of intent to negotiate an expanded framework for longer-term remote work arrangements.

No impact on social security

It is important to note that the new arrangement applies only to income taxation. The rules governing social security, as laid down in EU regulations (including A1 certification requirements), remain unchanged. As a result, remote work may still affect an employee’s social security position. Although the rules concerning social security have been extended as well since July 1st 2023 (with the introduction of the Remote working agreement).

Entry into force

The amendment protocol to the income tax treaty between the Netherlands and Germany officially entered into force on 31 December, 2025 and to apply from 1 January, 2026.

Greater certainty for workers and employers

With this treaty update, the Netherlands and Germany respond to evolving work patterns in cross-border regions. The new rules provide clarity and predictability for employees and simplify payroll administration for employers.

Law

New Employer Obligations from 2026: Key Information on Recruiting Third‑Country Nationals

As of 1 January 2026, an important new requirement will take effect for employers recruiting third‑country nationals from abroad. The legal basis for this is Section 45c of the German Residence Act (AufenthG), which introduces a new obligation for employers to provide specific information to third‑country national employees.

Who is affected by this obligation?

The information obligation applies to all employers established in Germany who

• enter into an employment contract with a third‑country national,
• whose place of residence or habitual abode is located abroad,
• whose place of residence or habitual abode is located abroad.

The provision is limited to an obligation to provide information. Neither employers nor employees are required to make use of the advisory services. The rule does not apply to foreign employees who were already employed by the employer on 1 January 2026, nor to foreign employees who are hired in Germany from that date onwards. The information obligation lapses only where cross‑border job placement within the meaning of Section 299 of the German Social Code, Book III (SGB III), is involved.

What needs to be communicated?

No later than on the employee’s first working day, the affected employees must be informed in writing (in text form). The notice must include the following information:

• Information on the free advisory service ‘Fair Integration’ regarding employment and social law matters pursuant to Section 45b of the Residence Act (AufenthG).
• Current contact details for the nearest “Fair Integration” advice center.

What is “fair integration”?

Das Bundesministerium für Arbeit und Soziales hat den Dienst „Faire Integration” als zuständigen Beratungsdienst benannt. „Faire Integration“ ist ein bundesweites, mehrsprachiges und unentgeltliches Beratungsangebot speziell für Drittstaatsangehörige. Der Dienst unterstützt internationale Fachkräfte unter anderem bei Fragen zum Arbeitsrecht, zu Arbeits- und Tarifverträgen, zu Lohn- und Gehaltsansprüchen, zur Sozialversicherung sowie zu allgemeinen Rechten am Arbeitsplatz.

This new provision, introduced against the backdrop of an increasingly complex and stringent immigration and employment law framework, is intended to offer better protection to foreign employees against exploitation, particularly as they may have only limited knowledge of employee rights in Germany.

Conclusion

With the new information obligation taking effect on 1 January 2026, employers not only ensure legal certainty but also send a strong signal of fairness and transparency in the recruitment process of third‑country nationals. By providing timely, written information on the free ‘Fair Integration’ advisory service and by communicating the relevant contact details, employers not only fulfil their statutory obligations but also create clear framework conditions that support a fair and well‑structured integration of international skilled workers.

Salary threshold for the EU Blue Card 2026

As of January 1, 2026, new salary thresholds will apply to various residence permits in Germany:

• The regular minimum annual gross salary for the approval‑free EU Blue Card amounts to 50,700 euros as of 1 January 2026 (2025: 48,300 euros), while for so‑called shortage occupations such as IT, engineering, or medical professions a reduced threshold of 45,934.20 euros (2025: 43,759.80 euros) applies. The latter also applies to young professionals who obtained their educational qualification within the three years prior to applying for an EU Blue Card.
• The minimum annual gross salary for residence permits for qualified professionals who are 45 years or older is 55,770 euros (2025: 53,130 euros). Otherwise, applicants must provide proof of adequate retirement provision.
• For residence permits based on pronounced practical professional experience, the minimum annual gross salary is 45,630 euros (2025: 43,470 euros).

Important with regard to the Blue Card: An EU Blue Card can, in principle, be revoked or not extended insofar as the relevant salary thresholds are no longer met.

“Work and Stay” Agency: Opportunities and challenges of digital skilled worker immigration

Introduction and objectives of the “Work and Stay” Agency (WSA)

The “Work and Stay” Agency (WSA) is a centrally planned project by the German federal government to modernize skilled worker immigration. It is intended to consolidate and digitize the processes surrounding labor migration – from visa application to the granting of residence permits – and make them accessible to applicants and employers via a central digital platform. The goal is to simplify lengthy administrative processes and make Germany more attractive as a labor market for international skilled workers. This project is an essential component of the current federal government’s coalition agreement.

Resolution of the key points by the Federal Cabinet

Am 5. November 2025 hat das Bundeskabinett die Eckpunkte zum Aufbau der „Work and Stay“-Agentur beschlossen. Ein wesentlicher Schwerpunkt der Eckpunkte liegt auf der vollständigen Digitalisierung aller Verfahrensabläufe, wodurch die „Work and Stay“-Agentur als zentrale digitale Infrastruktur für die gesamte Erwerbsmigrationskette fungieren soll.

The “One Stop Government” principle

The underlying “One Stop Government” principle stipulates that skilled workers will in future be able to process all steps – from submitting applications and uploading documents to communicating with the authorities involved – via a single digital portal. This eliminates the previous fragmentation between foreign missions, immigration authorities, recognition bodies and the Federal Employment Agency. The platform is to be designed in such a way that users can submit their documents at any time, check their own processing status and receive feedback centrally.

The “Once Only” principle

This portal is also based on the “Once Only” principle, which represents a significant relief compared to today’s system. Previously, various authorities often have to request the same documents again or check them in parallel, which leads to redundant processes and significant delays. In the future, information such as proof of qualifications, identity data or documents should only be provided once and then used system-wide within the administration. This means that skilled workers no longer have to submit the same documents multiple times and authorities can access facts that have already been checked. This not only reduces the amount of time required, but also increases the consistency and legal certainty of the procedures. Digitization should also avoid multiple surveys, parallel data storage and manual transfers, thus significantly improving cooperation between the bodies involved.

Bureaucracy reduction and process optimization

In addition, the key points provide for extensive measures to reduce bureaucracy and optimize processes. This includes both upstream and downstream procedures at home and abroad.

The aims are:

• the implementation and continuous improvement of a fully digitized visa procedure via the foreign portal;
• the evaluation of whether biometric data can in future be collected as early as the first contact with the foreign mission and stored for downstream process steps in Germany, so that additional interviews in Germany are no longer necessary;
• ensuring that facts that have already been established and verified are not re-examined without a comprehensible reason;
• the reduction of double checks and other overlaps between the visa procedure and the initial granting of a residence permit;
• the expansion of employer participation in the labor migration procedure by creating independent application routes for employers;
• the design of user-oriented and transparent procedures, so that the status of the procedure and the expected time of the decision are comprehensible at all times;
• enabling procedures for the granting of a residence permit optionally in English in order to be able to dispense with translations of English-language documents;
• the identification of whether and to what extent an authenticity check has been carried out for the documents submitted in each case.

Perspectives and central challenges

Politically, the “Work and Stay” Agency is predominantly viewed positively because it is intended to be a response to the acute shortage of skilled workers and demographic change. Proponents argue that a digital “one-stop government” platform can reduce bureaucratic hurdles and make Germany more internationally competitive by guiding international skilled workers through the application processes more quickly and transparently. It is also intended to relieve the burden on employers, who currently often have to coordinate applications and communication with various authorities themselves, and give them more insight into processing statuses and missing documents.

At the same time, there are critical voices and open questions regarding practical implementation. A recurring theme is that digital technology alone does not solve structural problems, such as a lack of personnel resources in authorities, lengthy recognition procedures, or the federal distribution of responsibilities between the federal government and the states. There is also discussion about how the agency will be specifically linked to existing procedures and responsibilities and whether it will actually lead to a noticeable acceleration if various authorities and federal levels continue to be involved.

Outlook

The “Work and Stay” Agency can contribute to the integration of skilled workers by bundling central services and simplifying processes. However, its impact depends on how well it takes existing structural challenges into account. A key risk is the emergence of a “shadow bureaucracy”: instead of streamlining existing processes, new administrative levels could emerge that require additional coordination and interfaces. This would undermine the desired relief and reduce efficiency.

In order for the agency to be successful, it must consistently focus on optimizing existing structures, promoting digital solutions and creating clear responsibilities. Only if these points are met can the initiative be more than a symbolic project and actually contribute to solving the shortage of skilled workers.

We will keep you informed about further developments.

China’s new K-Visa: A Practical Guide for Scientists and R&D Teams

By Ralph Koppitz, Attorney at Law and Partner, RÖDL China

China has introduced a new ordinary visa category—the K visa (K字签证)—specifically aimed at young foreign science and technology talent. The change is embedded in China’s immigration law framework and took effect on 1 October 2025. While the legal amendment itself is concise, its implications are best understood from a practical, real-world perspective.

This article looks at what the K visa means in particular for international scientists considering research activities in China.

What exactly has changed in China’s immigration law?

The legal basis for the K visa is China’s State Council amendment to the Regulations on the Administration of the Entry and Exit of Foreigners. The amendment formally adds the K visa to the list of China’s ordinary visa categories, defining it as a visa issued to “foreign young science and technology talents”. It introduces a corresponding rule stating that K visa applicants must meet the conditions set by the competent Chinese authorities and submit appropriate supporting documentation.

The regulation does not define age limits, eligibility lists, visa duration, or detailed procedures. Authorities have explicitly stated that these details will be released separately through Chinese embassies and consulates. This means the K visa is legally established, but operationally still unfolding.

What the K-Visa is intended to enable for scientists

From a scientist’s perspective, the K-visa reflects a shift in how China approaches international research mobility.

According to official explanations, the visa targets foreign researchers and STEM professionals who have studied at, or are affiliated with, well-known universities or research institutions, either in China or abroad. The focus is on academic background, research experience, and age, rather than on an existing Chinese employer. Authorities describe it as allowing more convenience in terms of entries, validity, and permitted stay.

In practical terms, the K visa is intended to make it easier for scientists to come to China to:

• explore research collaboration,
• participate in joint projects or laboratory exchanges,
• explore possible longer-term opportunities before committing to formal employment.

But the visa should not be misunderstood. It facilitates entry and presence, not unrestricted work. The scope of permitted activities will ultimately depend on how authorities define the implementing rules.

How the decision tree for the visa should look in practice

The most important question in connection with compliance with the regulations is not the designation of the visa, but what the person concerned will actually do in China.

If a foreign expert is employed by a Chinese entity, assumes operational responsibility, or performs core R&D work as part of the company’s output, China’s work authorization rules apply. In those cases, the Z visa plus work permit and work-type residence permit remain mandatory, regardless of seniority or expertise.

If there is no employment relationship and the activities are limited to, for example, the exchange of research results, cooperation discussions, early-stage research and development work or non-operational technical advice, the K-Visa may be appropriate, provided that the person concerned meets the future eligibility criteria.

In this respect, the K-Visa also differs from older options. The traditional F-Visa for companies is often too short or too narrowly interpreted for structured R&D activities, while the R-Visa is intended for high-ranking, nationally recognized talents and is (still) not accessible to many researchers in the middle of their careers. The K-Visa is intended to be between these two: more flexible than the F-Visa and easier to obtain than the R-Visa.

The K visa should be understood as a bridge, not a substitute, for work authorization. If cooperation deepens into actual employment, a compliant transition to the work-permit route will still be required.

Open questions are:

• the exact age limit for “young” talents,
• the documentary evidence required,
• visa validity, stay periods, and extension or conversion options.

These details will determine whether the K visa becomes a genuinely useful mobility tool—or a narrowly framed category with limited practical reach.

Legally, China has now embedded the K visa into its immigration system. Strategically, it signals a move toward earlier, more flexible engagement with international science and technology talent, while keeping the existing work authorization framework firmly in place. For scientists, the K visa may open a smoother path to research collaboration in China.

Posting and skilled worker immigration to Denmark – News for 2026

Denmark stands apart from most other EU countries when it comes to immigration, as Denmark has opted out of the EU’s Justice and Home Affairs cooperation. This means that the Danish immigration framework may differ in several important ways from the rules applied elsewhere in the EU.

In 2026, some changes in the area of skilled worker immigration and secondment to Denmark will come into force or be adopted. These changes are relevant for all companies that send employees to Denmark, as they extend the documentation obligations.

Extended documentation obligations for RUT registrations

Foreign companies that temporarily send employees to Denmark to provide services there must submit a prior posted worker notification. For this purpose, the company must register in the Register of Foreign Service Providers (RUT Register). The purpose of the RUT Register is to ensure compliance with Danish legislation.

In the RUT Register, foreign companies must provide information such as details of the Danish customer, details of the seconded employees and the date of the start and end of the service.

The registration must be available at the latest when the work in Denmark begins. If the services are provided in the construction sector, the company must provide its Danish customer with a copy of its RUT registration no later than three days after the start of the work.

From January 1, 2026, foreign companies that send third-country nationals to Denmark to provide services must upload additional documents when registering in the RUT Register. The following additional documents must be uploaded:

• Copy of the service agreement,
• Copy of the employment contract, including additional information provided to the employee in connection with the posting, for example in a posting agreement,
• Copy of the work and residence permit for the third-country national (if seconded by a company within the EU, the permit of that country must be uploaded; if seconded by a company outside the EU, the Danish permit must be uploaded).

These additional requirements only apply to third-country nationals. Failure to register or incomplete registration usually results in a fine.

Fee for EU residence documents for posted third-country nationals

In principle, third-country nationals must apply for a work and residence permit in order to work in Denmark – regardless of the duration of their stay in Denmark.

However, if a third-country national is employed by an EU company and this third-country national will be posted to Denmark for an assignment, this person may fall under the EU legal framework on freedom to provide services, which grants the third-country national the right to work and reside in Denmark without a Danish work and residence permit.

If the third-country national is expected to stay and work in Denmark for more than three months, a Danish EU residence certificate (EU-opholdsbevis) must be presented. This document is not a permit, but serves as proof that the third-country national falls under the specific EU framework.

To date, there has been no fee for applying for an EU residence certificate, but the Danish government has proposed the introduction of a fee. The bill is expected to be presented in January 2026 and, if passed, will be relevant for all EU companies that send third-country nationals to Denmark.

A1 for seconded third-country nationals

It is also important to note that while a posted third-country national may fall under the EU legal framework on freedom to provide services under residence law, this does not include the coordination of social security. EU Regulation 1231/2010, which extends the validity of EU Regulations 883/2004 and 987/2009 to third-country nationals, does not apply to Denmark. The authorities of the country of employment of the third-country national to be posted to Denmark will therefore generally not issue an A1 certificate confirming that the seconded employee continues to be subject to the social security system of the country of employment.

Recommendations

Denmark’s evolving framework on immigration and posting heightens compliance expectations. Immigration and posting rules in Denmark are complex and differ significantly from those in other EU countries, so companies posting workers to Denmark, especially third-country nationals, should review their internal posting processes and assess the immigration status of third country nationals prior to the posting.

National salary tax

New BMF letter on hospitality expenses – what will really change from 2025

With the letter dated November 19, 2025, the BMF is adapting the tax recognition of business-related hospitality expenses as operating expenses to the introduction of mandatory e-invoicing from January 1, 2025.

The letter replaces the BMF letter dated June 30, 2021 (BStBl. I S. 908) and applies exclusively to hospitality services from January 1, 2025. The 2021 letter remains authoritative for hospitality services up to December 31, 2024.

The new regulation does not involve any material changes to the requirements for the operating expense deduction of expenses for business-related hospitality costs, but rather a clarification of the verification process under digital and electronic conditions.

Compared to the BMF letter dated June 30, 2021, the letter dated November 19, 2025, essentially contains a clarification regarding the integration of hospitality invoices into the e-invoicing system that will apply from 2025.

• Hospitality invoices can be issued and transmitted as e-invoices within the meaning of § 14 Section 1 Sentences 3 and 6 UStG.
• Up to an invoice amount of 250 euros, a cash receipt containing the information according to § 6 KassenSichV is sufficient. If the total amount of the invoice is over 250 euros, a different invoice can initially be issued in the form of a cash receipt, but this must subsequently be corrected by an e-invoice.

As before, a prerequisite for the deduction of expenses for business-related hospitality as operating expenses is that the taxpayer provides written proof of the place, date, participants and occasion of the hospitality as well as the amount of the expenses. This proof must be provided promptly. This self-created document can be created digitally or digitized by the taxpayer. In both cases, it must be digitally merged with the hospitality invoice or the cash receipt for the hospitality. A reference from the (digital or digitized) self-created document to the (digital or digitized) hospitality invoice or the cash receipt for the hospitality is sufficient for this. An electronic link (e.g. unique index, barcode or other link with a document management system) is also permitted. The unambiguous assignment of the hospitality record to the hospitality document must also be guaranteed if only the hospitality invoice is digitally stored and the self-created document is still created in paper form. If a hospitality document cannot be assigned to a hospitality invoice, the operating expense deduction is not permitted.

Conclusion

The BMF letter 2025 does not bring any materially new requirements for hospitality receipts, but for the first time expressly integrates the existing verification obligations into the e-invoicing system that will apply from 2025.

Jurisdiction on double household management for spouses

In its judgment of September 9, 2025 (Ref. VI R 16/23, BFH NV 2025, 1577-1580), the Federal Fiscal Court ruled that expenses for rent and ancillary costs of one spouse can only be recognized within the framework of double household management of the other spouse if the latter is the tenant of the apartment. If, on the other hand, only one spouse is named in the rental agreement, the rent and ancillary costs cannot be taken into account as third-party expenses because the other spouse has no obligation of their own arising from the rental agreement.

In the case in question, the spouses lived with their daughter in an apartment in city A. There was a second apartment in city B, where the wife had her primary place of work. The husband had rented the second apartment. He alone was named in the rental agreement and paid the rent and ancillary costs from his sole account. In the joint tax return, the wife claimed these costs as income-related expenses for the professionally induced double household management. The Federal Fiscal Court refused to allow this deduction of income-related expenses on the grounds that the wife cannot generally claim these as third-party expenses reducing income without being contractually obligated herself. There was also no shortened payment route in such a way that the husband wanted to settle the wife’s liabilities by paying the rental costs, because the wife was not obligated under the rental agreement. The Federal Fiscal Court pointed out in its decision that even a payment of the rental costs from a joint account would not change the refusal of the income-related expense deduction. This is because it depends solely on who is the debtor of the rental costs under the rental agreement. The joint assessment of the spouses does not change this either, because the income of the spouses is determined separately there as well. A kind of economic community is not legally provided for in these cases, but rather the spouses face each other like strangers in the assessment.

Employers who reimburse their employees for the costs of the second home at the place of employment as additional expenses for a professionally induced double household management should therefore ensure that the apartment must be rented by the employee.

In the Spotlight

The underestimated data protection risk in international assignments: Outgoing data transfers from Singapore in focus

When EU headquartered employers post employees abroad, they often view data protection compliance primarily through a GDPR lens. Attention is paid especially to whether personal data may be transferred from the EU to the host country abroad. In practice, global mobility creates a second, frequently overlooked flow: personal data moving back from the foreign host country to EU headquarters.

This reverse flow is common. Assignees often remain integrated into HQ structures, participate in German HR processes, performance reviews, equity plans, group IT systems, and compliance reporting, or report functionally into Germany. As a result, personal data such as identification documents, family information, health records, disciplinary materials, or travel and location data is routinely sent back to Europe.

While the GDPR sets a high standard globally, host country data protection laws continue to apply to how data is collected, used, and transferred out of that jurisdiction. Most countries have regimes that are less strict overall than the GDPR but impose specific and sometimes unfamiliar requirements for cross-border transfers. The fact that GDPR allows data to be sent to a particular country does not mean that data can automatically be sent back to the EU without further analysis.

Singapore illustrates this well. The Personal Data Protection Act 2012 (PDPA) is one of the more developed data protection regimes in Asia. It requires organizations transferring personal data outside Singapore to ensure that the recipient provides a comparable standard of protection, typically through contractual and organizational safeguards. For mobility programs, this means that transfers from Singapore back to the EU must be assessed and documented.

For international assignments, data protection due diligence should run both ways. Before posting staff into a jurisdiction, companies should assess not only inbound GDPR issues but also host-country rules governing outbound data transfers to HQ, particularly where no local subsidiary or established compliance framework exists.

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