Filing your tax return in Luxembourg: the ultimate guide for employees

Filing a tax return in Luxembourg is a crucial step for taxpayers, whether they are Luxembourg residents or cross-border workers. This article guides you through tax obligations, required documents, deadlines, and filing methods.

Understanding the tax return process

A tax return is an official document that allows taxpayers to declare their income to the tax authorities. Its main purpose is to calculate the exact amount of tax due based on income earned, deductible expenses, and family situation. It also helps to avoid over-taxation and, in some cases, obtain a refund if too much tax has been withheld at source.

Withholding tax is another key aspect of the tax system, whereby income tax is deducted directly from an employee’s salary or pension before they receive their earnings.

Here’s how it works: the employer deducts tax from the employee’s salary on behalf of the tax administration. The amount deducted is determined based on the tax class or provisional tax rate listed on the employee’s tax card. This deduction is made monthly on earnings such as salaries, pensions, and annuities.

It is important to emphasise that this withholding tax is generally a payment on account of final tax. Therefore, after submitting an annual tax return, an adjustment may be made: either an additional payment if the withholding was insufficient or a partial refund if too much was withheld. To receive a refund for excessive withholding tax, filing a tax return is necessary. Although this process is not mandatory, once completed for the first time, it typically becomes an annual requirement.

For non-residents, particularly cross-border workers, this system also applies, and they must obtain a tax card from the Luxembourg tax administration.

Who must file a tax return in Luxembourg?

Filing a tax return is mandatory in the following cases:

For Luxembourg residents:

• If you have filed a tax return in previous years;
• If your taxable annual income exceeds €100,000 from a single job;
• If you have multiple jobs and your total annual income exceeds €36,000 (for single taxpayers without children) or €30,000 (for single parents);
• If requested by the tax authorities;
• Since 2018, if you have opted for joint taxation and tax treatment equivalent to residents.

For cross-border workers from France, Belgium, and Germany:

• If you have filed a tax return in previous years;
• If your taxable income in Luxembourg exceeds €100,000 per year;
• If you have multiple sources of income exceeding €36,000 (for tax class 1) or €30,000 (for tax class 1A);
• If you earn additional income not subject to withholding tax (e.g., rental income, freelance income).

Required documents for the tax return

To prepare your tax return, the following documents are essential:

• Annual salary certificate provided by your employer;
• Proof of family situation (e.g., marriage contract, contract of civil union, child’s birth certificate);
• Tax return from your country of residence (for cross-border workers requesting tax assimilation);
• Insurance certificates and bank statements for potential tax deductions.

The primary form for declaring income in Luxembourg is Model 100.

Tax rates in Luxembourg

Income tax follows a progressive scale:

• Ranging from 0% to 42%, depending on income level;
• A higher rate of up to 45.75% applies to incomes exceeding €200,005, including the contribution to the Employment Fund.

Tax return for cross-border workers in their country of residence

Although the Luxembourg income of cross-border workers’ is not taxable in France, Belgium, or Germany, it must still be declared:

• In France: via Form 2042C;
• In Belgium: through My MINFIN.

In Germany, filing a tax return is not mandatory unless you have additional income beyond your Luxembourg salary, work in Germany, or your spouse earns income there. In these cases, you must file a tax return in Germany.

Filing methods and deadline

• Paper version: fill out the form sent by the tax authorities and submit it to your tax office or send it by post;
• Online: use the MyGuichet.lu portal for faster processing (log in using LuxTrust or GouvID or eIDAS).

Since 2024, the deadline for filing the return has been extended to the end of the year following the tax year (N+1).

Important points

• Late submissions result in penalties and interest charges;
• Extensions can be requested if necessary;
• Online filing allows for faster processing (tax calculation within 15 days).

Tips to optimise your tax return

• Avoid last-minute filing, especially by post;
• Double-check all supporting documents before submission;
• Consult a tax advisor if you are unsure about potential tax optimisation options.

By following these recommendations, whether you are a Luxembourg resident or a cross-border worker, you can file your tax return efficiently and avoid any tax-related issues.

Want to easily generate your tax return? Taxx.lu is an online platform designed to simplify tax filing for individuals in Luxembourg. Paid service: €59.

Learn more about employment laws and working conditions in Luxembourg.