A withholding tax card or "tax card" is a necessary document for the employer or the pension fund in order to withhold taxes at source on wages 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 card is issued at the beginning of the year by the competent tax office (RTS office) of the Luxembourg Inland Revenue (Administration des contributions directes - ACD) for resident employees or pensioners.

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 deductions, made by the employer or the pension fund, are made according to the scale or rate indicated on the form.

The withholding tax on wages or pensions is determined by taking into account the tax reduction (deductions, abatements and tax credits) mentioned on the withholding tax card ("tax card").

How to proceed

Issuing of tax cards

The withholding tax cards are issued automatically by the ACD once a year, as well as in the event of a change in personal circumstances.

For employees who start work in Luxembourg, the card is issued following their affiliation with the Luxembourg Joint Social Security Centre (Centre commun de la sécurité sociale - CCSS) within, on average, 30 working days.

The following must always use form 164 as the first request for the deduction form:

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

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

If a taxpayer who received a tax card in year N has not received his tax card for the year N + 1 before 15 March of year N + 1, they must contact the competent RTS office and inform their employer that the application is in progress.

The taxpayer's current commune of residence determines which RTS office is competent.

Submission of the withholding tax card by electronic means

The Luxembourg Inland Revenue (ACD) is offering 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 of MyGuichet.lu, under "My data" in the "Taxation" section, under "Subscription to ACD documents".

This step is essential so as 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.

The taxpayer who gets married during the year has his marital status changed and is taxable according to the scale of the tax class 2. However, since the tax year 2018, they can, on request:

• opt for individual taxation (with or without reallocation of income); and
• calculate estimated rates 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 be moved into 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 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 rectified 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.

Employees must submit their original card to their employer (or the competent body) before unemployment or re-employment benefits can be granted.

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

The taxpayer who simultaneously receives several taxable salaries or pensions in Luxembourg obtains several tax cards which they must give to each respective employer and pension fund.

The withholding is carried out on the most stable and highest salary in accordance with the main card (1^st tax card), by applying the tax scale on salaries or pensions and the tax class indicated thereon. 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 with reallocation, the deduction is made in accordance with a forecast rate that they can also simulate online.

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 tax withholding 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 month with the annotation, 'Prière de reconsidérer mon taux au plus bas' (Please review my lowest rate). 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.

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 into an additional card.

Taxpayers must provide the necessary supporting documents (copies of both spouses' salary slips for the last 3 months) attesting to 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 review 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 deductions on the tax card

Employees/pensioners may file a request (using form 164 R) to have certain tax deductions listed on their tax card (deductions, abatements, tax credit) so that they can be taken into account by their employer or relevant pension fund when calculating 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);
• for the deduction of the increased-rate allowance for business expenses of disabled employees, a copy of the medical certificate specifying the degree of reduction of employee's work capacity should be attached.
• the tax allowance for sustainable forms of transport.

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 tax deductions listed on a tax card are valid only for the year for which they were requested. Applications must be renewed every year to ensure that the required conditions are met.

The advantage of tax-card listings is that they enable tax reductions (deductions, abatements, tax credit) 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 must be accompanied by the documents listed on the last page of the 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 must 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 to the employer or pension fund, the tax deducted at source on the salary or pension is determined on the basis of tax class 1, and the tax can not 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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