Taxation

 

Residents are subject to tax on their domestic and foreign taxable income. Non residents are taxable on their domestic income arising from Luxembourg sources only.

An individual may be deemed to be a resident of the State in which he has a permanent place of residence or where he has his centre of vital interests.

 

 

Taxation in Luxembourg

Income tax

declared annually

8 categories of income

e.g. investment, real estate income or capital gains

Value added tax (VAT)

on goods and services

 

Tax card

If you are employee in Luxembourg, your tax-card is issued and updated automatically by the RTS office in charge, apart from the fact that non-resident taxpayers have to continue to request an update of their address and civil status by filling in the form 164 NR.

More information

Employment income

Taxed monthly at source by the employer, on the basis of a taxcard.

Value added tax

• Standard rate: 15% (17% from 2015 (VAT) rates onwards)
• Reduced rates: 3%, 6%, 12% (for certain services and items)

You work in Luxembourg and are resident abroad or you are resident in Luxembourg and work abroad ?

You might encounter the question of the double taxation of a crossboarder activity, which is either eliminated by the exemption or the credit method (often on the basis of a bilateral double tax treaty). Luxembourg has signed double tax treaties with more than 80 countries to avoid double taxation on individual income.

In general you pay the tax in the country where you execute or realise your work (Luxembourg or abroad). And in your country of residence:

• exempt income may be taken into account to calculate the tax rate to pay (exemption method) or
• income tax paid in the country abroad may be deducted/credited from the tax to pay (credit method).

To be aware of all tax implications, you may contact your local embassy or speak to a tax consultant before signing your contract.