diff --git a/code.sh b/code.sh
index 9bd39d0..979ffef 100755
--- a/code.sh
+++ b/code.sh
@@ -268,14 +268,60 @@ elif ! grep -q '"remote\.containers\.dockerPath": *"'"$wrapper_quoted"'"' "$sett
     fi
 fi
 
-### Make sure that we have a writeable-by-user /root/.vscode-server directory
-
-# this is where vscode stores per-container data/settings
-if [ ! -w /root/.vscode-server ] ; then
-    info "Creating /root/.vscode-server"
-    sudo chmod a+x /root
-    sudo mkdir -p /root/.vscode-server
-    sudo chown $UID:"$(id -g)" /root/.vscode-server
+### See where VSCode is going to write machine specific config/data
+
+# VSCode puts its .vscode-server directory in the value of $HOME
+# determined by 'podman inspect <container>'. For toolboxes, three
+# values have been seen, depending on podman version.
+#
+#  /root
+#  /
+#  User's homedir
+#
+# The first two are OK - we just need to make them world-writable,
+# but for the third, we need ot create a symlink to avoid having
+# different toolboxes step on each other.
+
+homevar="$(flatpak-spawn --host podman inspect "$container_name" \
+    --format='{{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}' \
+    | grep ^HOME=)"
+homevar="${homevar#HOME=}"
+
+case $homevar in
+    /)
+        vscode_server="/.vscode-server"
+        ;;
+    /root)
+        vscode_server="/root/.vscode-server"
+        ;;
+    "$HOME")
+        vscode_server="/.vscode-server"
+
+        if [ -e "$HOME/.vscode-server" ] && [ ! -L "$HOME/.vscode-server" ] ; then
+            echo "$HOME/.vscode-server is not a symlink - this is probably a left-over." 1>&2
+            echo "Please delete this directory and re-run." 1>&2
+            exit 1
+        fi
+        if [ "$(readlink "$HOME/.vscode-server")" != $vscode_server ] ; then
+            info "Creating symlink from $HOME/.vscode-server to /.vscode-server"
+            ln -T -sf $vscode_server "$HOME/.vscode-server"
+        fi
+    ;;
+    *)
+        echo "\$HOME in container config is: '$homevar' - don't know how to handle this." 1>&2
+        exit 1
+    ;;
+esac
+
+### Make sure that we have a writeable-by-user .vscode-server directory
+
+if [ ! -w $vscode_server ] ; then
+    info "Creating $vscode_server"
+    if [ $vscode_server = /root/.vscode-server ] ; then
+        sudo chmod a+x /root
+    fi
+    sudo mkdir -p $vscode_server
+    sudo chown $UID:"$(id -g)" $vscode_server
 fi
 
 ### Make sure we have a visual-studio code configuration for this container
@@ -324,7 +370,7 @@ fi
 # but if the user adds any settings for the container, the settings-key in the
 # attached-container configuration file is overwritten without merging.
 
-settings="/root/.vscode-server/data/Machine/settings.json"
+settings="$vscode_server/data/Machine/settings.json"
 if $toolbox_reset_configuration || [ ! -f $settings ] ; then
     info "Creating $settings"
 
diff --git a/tests/default-mock.sh b/tests/default-mock.sh
index 6df88ba..68c80d0 100644
--- a/tests/default-mock.sh
+++ b/tests/default-mock.sh
@@ -14,6 +14,12 @@ if match flatpak install flathub com.visualstudio.code ; then
     exit 0
 fi
 
+if match podman inspect toolbox-vscode-test \
+         --format='{{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}' ; then
+    echo "NAME=fedora-toolbox"
+    echo "HOME=/root"
+fi
+
 if match flatpak ps --columns=instance,application ; then
     exit 0
 fi
diff --git a/tests/framework/run-one-test.sh b/tests/framework/run-one-test.sh
index 7313e01..7147937 100755
--- a/tests/framework/run-one-test.sh
+++ b/tests/framework/run-one-test.sh
@@ -33,6 +33,11 @@ ln -s /source/tests/framework/mock-flatpak-spawn.sh $bindir/flatpak-spawn
 
 ### Functions for tests
 
+fail() {
+    echo "$*" 1>&2
+    exit 1
+}
+
 assert_contents() {
     cat > /logs/expected
     if ! cmp -s /logs/expected "$1" ; then
@@ -41,6 +46,12 @@ assert_contents() {
     fi
 }
 
+assert_grep() {
+    if ! grep -q "$1" "$2" ; then
+        fail "Failed to find '$1' in '$2'"
+    fi
+}
+
 ### Run the test
 
 # shellcheck disable=SC1090
diff --git a/tests/test-basic.sh b/tests/test-basic.sh
index 6709f5b..a5933f5 100644
--- a/tests/test-basic.sh
+++ b/tests/test-basic.sh
@@ -11,6 +11,7 @@ test_basic() {
 
     assert_contents /logs/basic.cmd <<'EOF'
 flatpak list --app --columns=application
+podman inspect toolbox-vscode-test --format={{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}
 flatpak ps --columns=instance,application
 flatpak run com.visualstudio.code --remote attached-container+746f6f6c626f782d7673636f64652d74657374 /home/testuser/project
 EOF
@@ -76,6 +77,7 @@ test_installation() {
 flatpak list --app --columns=application
 flatpak remotes --columns=name
 flatpak install flathub com.visualstudio.code
+podman inspect toolbox-vscode-test --format={{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}
 flatpak ps --columns=instance,application
 flatpak run com.visualstudio.code --remote attached-container+746f6f6c626f782d7673636f64652d74657374 /home/testuser/project
 EOF
@@ -95,6 +97,7 @@ test_running() {
 
     assert_contents /logs/running.cmd <<'EOF'
 flatpak list --app --columns=application
+podman inspect toolbox-vscode-test --format={{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}
 flatpak ps --columns=instance,application
 flatpak enter 123456 sh -c 
         cd $0
diff --git a/tests/test-server-dir.sh b/tests/test-server-dir.sh
new file mode 100644
index 0000000..ba9f205
--- /dev/null
+++ b/tests/test-server-dir.sh
@@ -0,0 +1,101 @@
+# Different versions of toolbox+podman result in different  values of the HOME
+# environment variable in the container config. Since that determines the
+# location where Visual Studio Code puts the '.vscode-server' directory,
+# we have to handle them all.
+
+# shellcheck shell=bash
+
+do_mock_server_dir() {
+    if match podman inspect toolbox-vscode-test \
+             --format='{{ range .Config.Env }}{{ . }}{{"\n"}}{{ end }}' ; then
+        echo "NAME=fedora-toolbox"
+        echo "HOME=$1"
+        exit 1
+fi
+}
+
+### HOME=/
+
+mock_server_dir_topdir() {
+    do_mock_server_dir /
+}
+
+test_server_dir_topdir() {
+    code .
+    assert_grep '"remote.containers.copyGitConfig": false' \
+                /.vscode-server/data/Machine/settings.json
+}
+
+### HOME=/root
+
+mock_server_dir_root() {
+    do_mock_server_dir /root
+}
+
+test_server_dir_root() {
+    code .
+    assert_grep '"remote.containers.copyGitConfig": false' \
+                /root/.vscode-server/data/Machine/settings.json
+}
+
+### HOME=/home/testuser
+
+check_home_symlink() {
+    if [ ! -L /home/testuser/.vscode-server ] || \
+           [ "$(readlink /home/testuser/.vscode-server)" != "/.vscode-server" ] ; then
+        fail "Link to /.vscode/server wasn't created succesfully"
+    fi
+}
+
+mock_server_dir_home() {
+    do_mock_server_dir /home/testuser
+}
+
+test_server_dir_home() {
+    code .
+    check_home_symlink
+    assert_grep '"remote.containers.copyGitConfig": false' \
+                /home/testuser/.vscode-server/data/Machine/settings.json
+}
+
+### HOME=/home/testuser, symlink at ~/.vscode-server points somewhere else
+
+mock_server_dir_home_old_symlink() {
+    do_mock_server_dir /home/testuser
+}
+
+test_server_dir_home_old_symlink() {
+    ln -s /bah/bah /home/testuser/.vscode-server
+    code .
+    check_home_symlink
+    assert_grep '"remote.containers.copyGitConfig": false' \
+                /home/testuser/.vscode-server/data/Machine/settings.json
+}
+
+### HOME=/home/testuser, ~/.vscode-server exists and isn't a symlink
+
+mock_server_dir_home_old_dir() {
+    do_mock_server_dir /home/testuser
+}
+
+test_server_dir_home_old_dir() {
+    mkdir /home/testuser/.vscode-server
+    code . 2>&1 | tee /logs/server_dir_home_old_dir.stdout
+    [[ ${PIPESTATUS[0]} = 1 ]] || fail "Should have exited unsuccessfully"
+    assert_grep "$HOME/.vscode-server is not a symlink - this is probably a left-over." \
+                /logs/server_dir_home_old_dir.stdout
+}
+
+### HOME=<somehwere else
+
+mock_server_dir_unknown() {
+    do_mock_server_dir /home/otheruser
+}
+
+test_server_dir_unknown() {
+    code . 2>&1 | tee /logs/server_dir_unknown.stdout
+    [[ ${PIPESTATUS[0]} = 1 ]] || fail "Should have exited unsuccessfully"
+    assert_grep "\$HOME in container config is: '/home/otheruser' - don't know how to handle this." \
+                /logs/server_dir_unknown.stdout
+}
+