Non-resident taxpayers who are subject to taxation (taxation by assessment) in Luxembourg are required to report their income by filing a tax return (form 100).
Regardless of their address, natural persons are theoretically considered to be non-resident taxpayers in Luxembourg if they possess a centre of vital interests abroad, outside Luxembourg.
Even if they are not subject to tax liability, non-resident taxpayers can decide to file a tax return in order to regularise their withholding tax situation. In some cases, non-resident taxpayers may submit an annual adjustment form in place of the tax return.
In order to prevent the risk of computation and display problems, the Luxembourg Inland Revenue (Administration des contributions directes) recommends that taxpayers who download the PDF form should first save the form to their hard drive, then launch Acrobat Reader (version 10, 11, or Acrobat Pro) and then open the form using the Acrobat Reader menu (File > Open).
Who is concerned
It should be filed preferably by 31 March of the year following the tax year.
Taxpayers who can file a tax return for the year N have to do it by 31 December of the year N+1 at the latest.
In some cases, specific deadlines apply. These deadlines are communicated by the Luxembourg Inland Revenue (ACD) by mail.
Persons who require an extension of the deadline for submitting or filing the tax return should apply for the extension (preferably by fax or post) to the competent tax office.
Competent tax offices for non-resident taxpayers:
- the Luxembourg Y tax office has jurisdiction over taxpayers whose tax residence is in France;
- the Luxembourg Z tax office has jurisdiction over taxpayers whose tax residence is in Germany;
- the Luxembourg X tax office has jurisdiction over non-resident taxpayers whose tax residence is in Belgium or another country (with the exception of Germany or France).
If the taxpayer refuses to file their tax return, the tax office will be forced to determine the tax liability using the estimated assessment procedure (taxation d'office par voie d'estimation).
How to proceed
General principles of taxation
Non-resident taxpayers who are taxable in Luxembourg can opt to be treated as Luxembourg residents for tax purposes, i.e. they choose to be treated as a taxpayer residing in Luxembourg.
They will then be entitled to the same tax deductions and tax credits available to resident taxpayers.
It is important to note that this option can only work in the taxpayer's favour. If the option resulted in a less favourable situation for the taxpayer, the Luxembourg Inland Revenue would reject the application.
If a non-resident taxpayer chooses not to take up this option, they will be liable for tax only on their income from Luxembourg sources. In that case, only a limited number of expenses are tax deductible.
Non-resident taxpayers who opt to be treated as Luxembourg residents for tax purposes must report both their exempt and their non-exempt income (e.g., income received from the rental of a property located in Belgium, the salary of a spouse employed in France, etc.) in their tax return.
In this case, the foreign exempt income is not taxable as such, but is taken into account in determining the applicable tax rate for the non-exempt taxable income.
Simple example illustrating the case of a single (unmarried) taxpayer (tax class 1):
Taxable income in Luxembourg (salary): EUR 40.000 (indigenous income = income from Luxembourg source)
Income from paid employment originating in a third country with which Luxembourg has a tax treaty against double taxation (exempt income in Luxembourg): EUR 10,000.
The total taxable income taken into account to calculate the tax rate is 40,000 + 10,000 = EUR 50,000.
According to the 2017 income tax scale, the tax due for an income of EUR 50,000 (tax class 1) amounts to EUR 9,106. Thus, the overall tax rate is 9,106 / 50,000 = 18.21 %. To this tax rate is added the 7% contribution to the employment fund, which brings the applicable rate to 19.48%.
This rate is applied only to non-exempt income, i.e., in this case, to the EUR 40,000.
Tax due on taxable income in Luxembourg, based on the tax scale: 40,000 × 19.48 % = EUR 7,792.
Non-resident taxpayers who are taxed jointly must file a single tax return for all of their domestic income taxable in Luxembourg. The tax is determined on the basis of the taxpayers' aggregate joint net income, and is payable by them as a unit.
Determination of taxable income
Non-resident taxpayers, whether they are treated as resident taxpayers or not, are taxed in Luxembourg only on the income they earn in Luxembourg (i.e., their domestic income). That income is subdivided into 8 categories:
- business profits;
- agricultural and forestry profits;
- earnings from self-employment;
- net income from paid employment;
- net income from pensions or annuities;
- net investment income;
- net rental property income;
- and net miscellaneous income.
The taxable income is determined by the sum of the net domestic income, after deduction of:
- the minimum flat-rate;
- the mandatory social contributions;
- supplementary pension insurance premiums (LRCP).
For non-resident taxpayers who have opted to be treated as residents for tax purposes, the tax rate is determined by adding together the different categories of net domestic income, and deducting special expenses such as:
- allowances paid to a divorced spouse or other permanent allowances;
- interest payments on consumer loans used to finance the purchase of a car, movable assets, etc. (note that interests paid in connection with existing buildings or those under construction are not considered as special expenses, and must be reported on sheet L, form 100);
- voluntary and private insurance premiums and payments;
- gifts and donations, etc.
Income subject to tax (taxable income) is equal to the income deferred at the end of the tax form, minus certain deductions (e.g.: allowance for extraordinary expenses borne by the taxpayer).
This adjusted taxable income is then matched against the income brackets in a progressive income tax scale.
Submission of the tax return
In principle, each February, taxpayers should receive:
- either an invitation to download and electronically complete the tax return forms provided on Guichet.lu or on the website of the Luxembourg Inland Revenue (ACD);
- or a paper form (form 100) by mail.
The declarant shall submit in person or send the completed and signed declaration to the competent tax office.
Even if the taxpayer has received a paper form, they can complete the tax return electronically and send it to the ACD via MyGuichet.lu, along with the various supporting documents.
Watch the tax return tutorial on MyGuichet.
The declarant must attach certain supporting documents to his tax return:
- a compensation certificate (annual salary statement) and/or annual pension statement;
- a certificate showing the amount of interest paid on a mortgage or personal loan taken out during the tax year in question (annual financial statements);
- a civil partnership certificate when joint taxation is requested for the first time for the tax year in question.
Declarants must also include:
- all supporting documents which substantiate their personal situation or any other information provided in the declaration;
- proof of income they receive in their country of residence.
In the event of an oversight or an error in the tax return—regardless of whether the return is sent by post or electronically—taxpayers should contact the competent tax office.
Any request for correction must necessarily be communicated in writing to the competent tax office within 3 months of the taxpayer sending the declaration.
Setting the amount of tax payable
The income tax payable by the taxpayer is determined by matching the rounded-off adjusted taxable income against the income brackets in a progressive tax scale.
The progressive scale for the 2017 tax year is divided into 23 incremental tax brackets ranging from 0 % to 42 % plus an additional 7 % to 9 % for the contribution to the employment fund.
Owing to the progressive nature of the scale, taxpayers with higher income pay proportionally more tax than taxpayers with lower income.
Forms / Online services
Income tax return for resident and non-resident natural persons (form 100)
Déclaration pour l'impôt sur le revenu pour personnes physiques résidentes et non résidentes (modèle 100)
Einkommensteuererklärung für ansässige und nicht ansässige Personen (Vordruck 100)