Certain measures of the recent tax reform have a direct impact on married taxpayers with regard to their withholding tax card (tax card) for salaries and pensions (RTS) and also in matters of taxation by assessment.
As from the tax year 2018 (1 January 2018), certain married taxpayers will have the possibility to choose between joint or individual taxation.
Married taxpayers can choose between joint or individual taxation, whether they are resident or non-resident, provided the conditions for tax assimilation are met.
In order to choose between joint or individual taxation, the spouses must submit and sign a joint application.
Married resident taxpayers do not need to fulfil any other requirement.
Married non-resident taxpayers, provided they are eligible, must choose to be taxed as resident taxpayers.
For any given fiscal year N, a choice made after March 31 N + 1 is no longer taken into account and, beyond that date, the choice made before that date is irrevocable.
Example: for the tax year 2018, the cut-off date is 31 March 2019.
Note that the choices submitted via MyGuichet.lu are given priority by the Administration des contributions directes (Luxembourg Inland Revenue).
From 1 January 2018 onwards, resident taxpayers who are married or who are getting married in the course of the year, will have the choice between:
With respect to individual taxation, when there are children in the household, tax class 1 does not change, but the other advantages arising from the presence of children in the household are taken into account in accordance with the conditions linked to the type of taxation chosen.
As of 1 January 2018, non-resident married taxpayers will be assigned tax class 1 and will be taxed on their Luxembourgish income only, if they fail to make a joint decision.
However, if they meet the conditions and choose to be treated as resident taxpayers, they will be able to choose between:
The choice between joint taxation, pure individual taxation or individual taxation with reallocation of income results in a tax rate that will be recorded on each spouse's tax card (depending on the case, this rate can be common to both spouses or individual).
In the case of individual taxation, tax class 1 does not vary if there are children in the household, but the other advantages arising from their presence in the household are taken into account in accordance with the conditions linked to the type of taxation chosen.
Taxpayers who have chosen to be treated as resident taxpayers are required to file a tax return.
The choice of type of taxation can be made within, the set time period:
If no choice is made in the course of tax year N, the taxpayer can still make his or her choice after the end of the tax year at the time of filing of their tax return. The deadline for making the choice is set to 31 March of the year N+1.
If the taxpayers fail to make a choice, they will automatically be allocated tax class 1 and will be taxed on their Luxembourg-source income only.
Please note that choices submitted via the online procedure will be given priority by the Luxembourg Inland Revenue (ACD).