Identifying and reporting directors' fees or attendance fees
Last update
Directors' fees or attendance fees and other similar remuneration from a Luxembourgish source which a resident or non-resident taxpayer receives in their capacity as a director, auditor or a similar position in a joint stock company (sociétés par actions), a limited liability company (sociétés à responsabilité limitée), a cooperative company (sociétés coopératives) or other national institutions, are taxable in Luxembourg under the category "Earnings from self-employment."
However, the compensation paid to directors involved in the daily management of a company is considered as "Income from paid employment."
Attendance fees paid to resident or non-resident taxpayers by the Government, one of its communes or a Luxembourgish public-law institution are taxable under the category of "Earnings from self-employment". However, attendance fees paid to delegates of Professional Federations and Chambers (Chambres et Fédérations professionnelles), the National Health Fund (Caisse nationale de santé), the Health Insurance Funds (Caisses de maladie), Social Insurance entities, the Economic and Social Council (Conseil économique et social) as well as to members of communal councils or communal committees, and national administrative committees, are nevertheless considered to be "Income from paid employment" in the following situations:
- attendance fees paid, for example, to a government employee as compensation for work as a delegate or member performed as part of their public duties. This income from paid employment is nevertheless exempt from tax withholdings on salaries and, consequently, is taxable after the end of the tax year on the basis of a tax return (taxation using the tax-base method);
- attendance fees paid, for example, to an employee of a communal administration who attends communal committee meetings as part of their duties, or to a teacher as a member of a school committee, are subject to tax withholdings on their salaries under the normal system.
Who is concerned
Any taxpayer:
- who is a resident and receives directors' fees or attendance fees from a Luxembourgish or foreign source, and who is required to file an income tax return;
- who is a non-resident and receives directors' fees or attendance fees from a Luxembourgish source and who is required to file an income tax return;
- who is a non-resident and receives directors' fees or attendance fees from a Luxembourgish source and who decides to file an income tax return ;
- who is a non-resident and receives directors' fees or attendance fees from a Luxembourgish or foreign source and who opts to be treated as a Luxembourg resident for tax purposes.
How to proceed
Calculation of operating expenses
A (resident or non-resident) taxpayer in receipt of directors' fees or attendance fees may, under all circumstances, claim operating expenses by filing an income tax return. Operating expenses include, in particular, travel expenses and out-of-pocket expenses. To that end, the taxpayer may benefit from a flat-rate allowance, which is calculated as follows:
| Annual gross revenue (in euros) | Flat-rate allowance for operating expenses (in euros) |
|---|---|
| up to 2,000 | 30 % |
| from 2,000 to 6,000 | 600 + 25 % (revenue - 2,000) |
| from 6,000 to 15,000 | 1,600 + 20 % (revenue - 6,000) |
| greater than 15,000 | 3,400 |
When the flat-rate allowance does not cover the actual operating expenses, the taxpayer may claim actual expenses. In that case, they must attach the corresponding supporting documents to their tax return.
Example
- Gross directors' fees: EUR 14,200
- Operating expenses: EUR 7,000
- Flat-rate allowance for operating expenses: EUR 1,600 + 20 % x (14,200 - 6,000) = EUR 3,240
The taxpayer deducts the EUR 7,000 in operating expenses and attaches the supporting documents.
Social security contributions (where applicable) in relation to the directors' fees or attendance fees are deductible as special expenses and should be reported on page 14 of the income tax return form in Box 1433 (non-exempt income) or Box 1434 (exempt income).
Resident taxpayer scenario
In terms of taxation, directors' fees or attendance fees, as well as special indemnities and benefits allocated in addition to or instead of directors' fees, from a Luxembourgish source, are subject to withholding at source at a rate of 20 % of the gross amount (or 25 % of the net amount), collected by the payer.
Directors' fees or attendance fees from a Luxembourgish source that are collected by a resident taxpayer should be reported on the income tax return form (form 100) and are taxable at the ordinary progressive rates. The maximum marginal tax rate (including the solidarity tax) amounts to either 42.80 %, or 43.60 %. The 20 % withholding at source is creditable against the income tax liability.
When filing their income tax return as a resident, the taxpayer must declare the income from directors' fees and attendance fees that they have collected during the year from Luxembourgish and foreign sources on page 6 of the income tax return form (form 100 – Section "Earnings from self-employment").
The first 2 columns on page 6 of the income tax return form are for non-exempt income and the next 2 columns are for exempt income.
Non-exempt income
Directors' fees or attendance fees paid by the Government or one of its communes, a Luxembourgish public institution or a company that has its registered office or principal place of business in the Grand-Duchy, are taxable in Luxembourg and must be reported as follows:
Directors' fees
- Boxes 630 / 631 (Row D): the total gross directors' fees collected in the year (amount collected, plus withholding at source). The taxpayer attaches a statement indicating the gross amount collected, the tax withheld at source and the payer of the fees.
- Boxes 634 / 635 (Row D): the expenses incurred by the taxpayer in relation to the directors' fees. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
- Box 650: the taxpayer must report the 20 % (or 25 %) withholding at source levied by the payers.
Attendance fees
- Boxes 638 / 639: the total gross attendance fees collected in the year (amount collected, plus withholding at source). The taxpayer attaches a statement indicating the gross amount collected, the tax withheld at source and the payer of the attendance fees.
- Boxes 642 / 643: the expenses incurred by the taxpayer in relation to the attendance fees. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Instead of the flat-rate allowance for operating expenses, the delegates of Professional Federations and Chambers, the National Health Fund (Caisse nationale de santé), the Health Insurance Funds (Caisses de maladie), Social Insurance entities, the Economic and Social Council (Conseil économique et social), as well as members of communal councils or communal committees, and national administrative committees who receive attendance fees may opt for an allowance for out-of-pocket-expenses of EUR 15 per session, which may not exceed EUR 45 per month or EUR 540 per year. When actual expenses exceed the flat-rate allowance, the taxpayer may request that actual expenses be taken into consideration on the basis of supporting documents.
Exempt income
In theory, directors' fees or attendance fees from foreign sources are not taxable in Luxembourg, and are consequently reported on page 6 of the income tax return in the exempt income column.
Directors' fees
- Boxes 632 / 633 (Row D): the total gross directors' fees collected in the year from a foreign source. The taxpayer attaches a statement indicating the gross amount collected and the payer of the directors' fees.
- Boxes 636 / 637 (Row D): the expenses incurred by the taxpayer in relation to the directors' fees from a foreign source. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Attendance fees
- Boxes 640 / 641: the total gross attendance fees collected in the year from a foreign source. The taxpayer attaches a statement indicating the gross amount collected and the payer of the attendance fees.
- Boxes 644 / 645: the expenses incurred by the taxpayer in relation to the attendance fees from a foreign source. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Non-resident taxpayer scenario
In terms of taxation, directors' fees or attendance fees, as well as special indemnities and benefits allocated in addition to or instead of directors' fees, from a Luxembourgish source, are subject to withholding at source at a rate of 20 % of the gross amount (or 25 % of the net amount), collected by the payer.
Non-resident taxpayer must file an income tax return and report any directors' fees and/or attendance fees on it if:
- the gross amount of the directors' fees or attendance fees collected from a Luxembourgish source (non-exempt income) is more than EUR 100,000 euros per year;
- the gross amount of the directors' fees or attendance fees collected from a Luxembourgish source (non-exempt income) is less than or equal to EUR 100,000 per year and exceeds one of the other tax basis limits.
Non-resident taxpayer may file an income tax return and report any directors' fees and/or attendance fees on it if:
- the gross amount of the directors' fees or attendance fees collected from a Luxembourgish source (non-exempt income) is less than or equal to EUR 100,000 per year;
- they collect directors' fees and/or attendance fees from a Luxembourgish source (non-exempt income) or a foreign source (exempt income) and opt to be treated as a resident for tax purposes.
Directors' fees and attendance fees from a Luxembourgish source are taxable at the ordinary progressive rates. The maximum marginal tax rate (including the solidarity tax) amounts to either 42.80 %, or 43.60 %.
The 20 % withholding at source in Luxembourg is creditable against the income tax liability. The tax withheld at source is a final tax if the non-resident taxpayer has not received any other professional income—business profit, agricultural and forestry profit, earnings from self-employment, income from pensions or annuities, or income from paid employment—that is taxable in Luxembourg, and the gross amount of the directors' fees received does not exceed EUR 100,000 per year. As such, non-resident taxpayers who satisfy both of the conditions mentioned above are not required to file an income tax return in Luxembourg.
Nevertheless, the taxpayer may still file a tax return if they wish, for example, to claim operating expenses (out-of-pocket and travel expenses) and/or have their family situation taken into account. If they do file a tax return, only the income from the directors' fees or attendance fees from Luxembourgish sources must be reported on the return form.
When filing their income tax return as a non-resident, the taxpayer must report any directors' fees and attendance fees that they collected during the year from Luxembourgish or foreign sources on page 6 of form 100 of the income tax return.
The first 2 columns on page 6 of the income tax return form are for non-exempt income and the next 2 columns are for exempt income.
Non-exempt income
Directors' fees or attendance fees paid by the Government or one of its communes, a Luxembourgish public-law institution or a company that has its registered office or principal place of business in the Grand-Duchy, are taxable in Luxembourg and must be reported as follows:
Directors' fees
- Boxes 630 / 631 (Row D): the total gross directors' fees collected in the year (amount collected, plus withholding at source). The taxpayer attaches a statement indicating the gross amount collected, the tax withheld at source and the payer of the fees.
- Boxes 634 / 635 (Row D): the expenses incurred by the taxpayer in relation to the directors' fees. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
- Box 650: the taxpayer must report the 20 % (or 25 %) withholding at source levied by the payers
Attendance fees
- Boxes 638 / 639: the total gross attendance fees collected in the year (amount collected, plus withholding at source). The taxpayer attaches a statement indicating the gross amount collected, the tax withheld at source and the payer of the attendance fees.
- Boxes 642 / 643: the expenses incurred by the taxpayer in relation to the attendance fees. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Instead of the flat-rate allowance for operating expenses, the delegates of Professional Federations and Chambers, the National Health Fund (Caisse nationale de santé), the Health Insurance Funds (Caisses de maladie), Social Insurance entities, the Economic and Social Council (Conseil économique et social), as well as members of communal councils or communal committees, and national administrative committees who receive attendance fees may opt for an allowance for out-of-pocket-expenses of EUR 15 per session, which may not exceed EUR 45 per month or EUR 540 per year. When actual expenses exceed the flat-rate allowance, the taxpayer may request that actual expenses be taken into consideration on the basis of supporting documents.
Exempt income
In theory, directors' fees or attendance fees from foreign sources are not taxable in Luxembourg, and are consequently reported on page 6 of the income tax return in the exempt income column, but only if the taxpayer opts to be treated a resident for tax purposes.
Directors' fees
- Boxes 632 / 633 (Row D): the total gross directors' fees collected in the year from a foreign source. The taxpayer attaches a statement indicating the gross amount collected and the payer of the directors' fees.
- Boxes 636 / 637 (Row D): the expenses incurred by the taxpayer in relation to the directors' fees from a foreign source. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Attendance fees
- Boxes 640 / 641: the total gross attendance fees collected in the year from a foreign source. The taxpayer attaches a statement indicating the gross amount collected and the payer of the attendance fees.
- Boxes 644 / 645: the expenses incurred by the taxpayer in relation to the attendance fees from a foreign source. Operating expenditures include, in particular, travel expenses and out-of-pocket expenses. In this regard, the taxpayer may deduct either the actual operating expenses, providing supporting documents, or opt for the flat-rate allowance (without supporting documents).
Online services and forms
Who to contact
-
Luxembourg Inland Revenue (ACD)
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
Please click on the link above to find the competent department.
Related procedures and links
Procedures
Links
Further information
Legal references
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Loi modifiée du 4 décembre 1967
concernant l'impôt sur le revenu
-
Circulaire LIR n°91/1 du 26 septembre 2003
Régime d'imposition des jetons de présence alloués : - aux délégués des Chambres et Fédérations professionnelles, des Caisses de Maladie, des Assurances Sociales, du Conseil Economique et Social, - aux membres des conseils communaux ou des commissions communales, - aux membres des commissions administratives de la marque nationale
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Circulaire LIR n°94/4 du 24 juin 2008
Imposition des tantièmes dans le chef des personnes physiques
