A tax card is a necessary document for the employer or the pension fund in order for them to withhold taxes at source on salaries or pensions. It provides information about:

• the tax class of the employee or pensioner (for the main card); or
• the tax rate for the additional card; or
• a projected rate for married taxpayers who have chosen an individual with reallocation taxation.

The multi-annual tax card is issued by the competent tax office (RTS office) of the Luxembourg Inland Revenue (Administration des contributions directes - ACD) for resident employees or pensioners. As a general rule, the taxpayer's current commune of residence determines which RTS office is competent.

Who is concerned

Individuals employed in Luxembourg or pensioners who receive a statutory retirement pension taxable in Luxembourg must, in principle, have a tax card because incomes from a salaried occupation and pensions paid by a Luxembourg pension fund are subject to tax withholding.

The tax withheld by the employer or the pension fund is in accordance with the scale or rate indicated on the tax card.

The withholding tax on salaries or pensions is determined by taking into account the tax reductions (deductions and allowances) mentioned on the tax card.

How to proceed

Issuing of tax cards

For employees who start work in Luxembourg, the tax card is automatically issued by the Luxembourg Inland Revenue (ACD) following their affiliation with the Luxembourg Joint Social Security Centre (Centre commun de la sécurité sociale - CCSS) within, on average, 30 working days. Depending on the type of change in personal circumstances of the employee or the employer, a new tax card will be issued.

In the case of a first-time request for a tax card, the following, among others, must always use form 164:

• employees taxable in Luxembourg and affiliated as a non-salaried worker with the CCSS; or
  
• employees taxable in Luxembourg and not affiliated with the CCSS.

Since 1 January 2022, temporary agency workers no longer need a tax card. These salaries are subject to a 10 % flat tax on the gross amount, less the social contributions. Temporary agency workers with a gross hourly wage in excess of EUR 25 have to request their tax card by submitting the form 162 F to the competent RTS office. For these workers, the tax withheld will be determined according to the common tax scheme

Tax cards are sent directly to recipients by post. It cannot be picked up directly from the issuing RTS office.

Taxpayers who have not received their tax card within 30 working days of their first day of employment with their new employer should contact the competent RTS office and inform their employer that the application is still pending.

The competent RTS office is determined depending on the taxpayer's current commune of residence.

Submission of the withholding tax card by electronic means

The Luxembourg Inland Revenue (ACD) offers the activation of the eDelivery feature for the withholding tax card. Doing so allows taxpayers to receive this document in electronic format in their Private eSpace on MyGuichet.lu.

To benefit from this service, the taxpayer must first subscribe to the eDelivery function for official documents sent by the ACD. The subscription can be made in their private eSpace on MyGuichet.lu, under 'My data' in the 'Taxation' section, under 'Subscription to ACD documents'.

This step is essential in order to receive the documents in the private eSpace.

The taxpayer receives an email as soon as a new document is posted in their private eSpace. The document can be consulted in PDF format.

Changes in personal or professional circumstances

The tax card is automatically updated by the ACD within an average of 30 working days if the following events occur:

• a change of employer;
• a change in the employer's company name or address;
• the employee is deregistered from the Joint Social Security Centre (CCSS) by the employer;
• retirement, in accordance with the social security laws;
• a change in the composition of a taxpayer's household as reported to the Children's Future Fund (Caisse pour l'avenir des enfants - CAE).
• any change of address and/or marital status of a resident taxpayer as reported to a "Biergercenter" of a Luxembourg communal administration.

Tax cards are not affected by civil partnerships.

A taxpayer getting married during the year will have the marital status changed and is taxable according to the scale of the tax class 2. However, as of the 2018 fiscal year, they may choose to be taxed separately and can, upon request, select individual taxation (pure individual taxation or with reallocation). They can also calculate the estimated tariffs in an online simulation.

The taxpayer who becomes a parent during the year changes tax class: in the case of the birth or adoption of a child, the taxpayer may, on request, benefit from a tax reduction for that child and obtain tax class 1a, unless they benefit from tax class 2.

These tax class changes on the tax card take effect from the date of marriage, of the processing of the application for individual taxation, or of the birth of the child. The amount of withholding tax can be rectified following the submission of the new tax card to the employer or the pension fund.

Tax deducted at source may also be adjusted for the entire year, from 1 January to 31 December, either by:

• annual adjustment; or
• by submitting a tax return.

Checking and submission of tax cards

The taxpayer must check the information printed on the card upon receipt.

Since 1 January 2022, employees are no longer required to submit their original tax card to their employer or to the body responsible for granting unemployment or re-employment benefit. An electronic copy of the tax card is made available to the employer by the ACD.

In principle, pensioners only receive a copy for information purposes, while the original is sent directly to the pension fund. The tax card is established based on data from the last card issued when the taxpayer was employed.

If any of the information on the card is incorrect, the changes must be requested from the Luxembourg Inland Revenue  using the form 164 R and attaching the required supporting documents.

The Luxembourg Inland Revenue reserves the right to request supporting documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its offices.

The different types of tax cards

Taxpayers who simultaneously receive several taxable salaries or pensions in Luxembourg receive a tax card for each respective employer and pension fund.

The withholding tax is levied on the most stable and highest salary in accordance with the the main tax card (the '1^st tax card'), by applying the tax scale on salaries or pensions and the tax class indicated on the card. The main tax card is allocated to the most stable and highest salary or pension.

For married taxpayers who have opted for joint taxation, individual pure, or individual taxation with reallocation, the withholding is made in accordance with an estimated tax rate which they can find out about in an online simulation.

In all other cases, the withholding is made on the basis of an additional tax card (second, third, etc., tax card), with the application of a fixed withholding tax rate of:

• 33 % for tax class 1;
• 21 % for tax class 1a;
• 15 % for tax class 2.

However, this fixed rate can be reduced on demand. Taxpayers applying for a reduced rate must attach copies of their payslips for the last 3 months with the annotation, 'Prière de reconsidérer mon taux au plus bas' (Please reconsider my lowest tax rate). This change has no influence on the tax due at the end of the year, but only on the amount of tax withheld at source.

If the main tax card does not apply to the most stable and highest income, taxpayers may file a request with the relevant RTS office, using form 164 R, to have the main card changed to an additional card.

Taxpayers must provide the necessary supporting documents (copies of the salary slips of both spouses for the last 3 months) attesting their income.

Taxpayers must specify that they wish to have the main card changed to an additional card by including the annotation, 'Prière de reconsidérer la fiche principale' (Please reconsider the main card). This change has no influence on the tax due at the end of the year, but only on the amount of tax deducted at source.

Registration of tax reductions on the tax card

The employee or pensioner can request the registration of certain tax reductions (deductions and allowances) and certain tax credits on their tax card (using the form 164 R) so that employers or the competent pension fund can take these into account for the calculation of the net income.

For example, a taxpayer may request the registration of:

• additional professional expenses (fees);
• single-parent tax credit (crédit d'impôt monoparental - CIM);
• interest expenses (only on personal loans – special expenses);
• divorce-related arrears on payments and permanent expenses (special expenses);
• old-age provident fund premiums (special expenses);
• payments into a home savings scheme (special expenses);
• certain extraordinary expenses (illness, parents in need, disability, household staff expenses, childcare expenses, children who do not belong to the taxpayer's household, etc.);
• insurance contributions and premiums (special expenses);
• flat-rate travel expenses (FD);
• the deduction of the increased allowance for business expenses of disabled/impaired employees (a copy of the medical certificate specifying the degree of reduction of the employee's work capacity should be attached).

Interest expenses relating to the purchase of a residential property may not be included on the tax card, and will only be taken into account as expenses upon the filing of an income tax return (form 100, sheet L).

The registration of a tax reduction and certain tax credits on a tax card is valid only for the year for which it was requested. Requests must be renewed each year to ensure that the required conditions are still met.

The advantage of registrations on tax cards is that they enable tax reductions (deductions and allowances) and tax credits to be taken into account when calculating the net salary without having to wait for the income tax assessment notice resulting from the tax return.

The amount of tax deducted at source during a fiscal year may occasionally be too high or too low. The remainder may be reimbursed or collected retroactively, in the course of the year following the tax year concerned:

• either through taxation by assessment (form 100 - tax return); or
• by way of annual adjustment (form 163).

Supporting documents to be submitted

The supporting documents to be attached to the application for registration of a tax deduction are listed on the last page of form 164.

The Luxembourg Inland Revenue reserves the right to request additional supporting documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its offices.

Requesting a duplicate tax card

Employees/pensioners who are Luxembourg residents and who have lost their tax card can file a request for a duplicate with the relevant RTS tax office, preferably using the form 164 R provided for that purpose.

No tax card

If no tax card is submitted, the tax deducted at source on the salary or pension is determined on the basis of tax class 1, and the tax cannot be lower than 33 %.

This tax deduction may be corrected once the tax card has been submitted to the employer, or by adjustment through:

• the submission of the tax return; or
• annual adjustment

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