Non-resident taxpayers who earn most of their income in Luxembourg can opt to be treated as resident taxpayers.
Provided they meet the conditions to be treated as resident taxpayers, they may, on request, benefit from the same deductions, allowances and credits as resident taxpayers.
This applies to all non-resident taxpayers who have their tax residence or usual place of residence abroad while having a certain income (professional and/or from property) that is taxable in Luxembourg.
The taxable income in Luxembourg must exceed a certain threshold of the non-resident's worldwide income (both domestic - from Luxembourg source - and foreign).
At least 90 % of the income must be taxable in Luxembourg.
The 90 % threshold can be calculated by reference to each of the partners' or spouses' individual situation.
Taxpayers residing in Belgium can claim to be treated as resident taxpayers if either 50 % of the professional income of the household is taxable in Luxembourg or if they fulfill the 90 %-condition.
The income tax return (form 100) should be filed with the relevant tax office preferably by 31 March of the year following the tax year concerned, and observing the specific submission deadlines indicated by the different departments of the Luxembourg Inland Revenue (Administration des contributions directes - ACD).
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.
Non-resident taxpayers can apply to be treated as a resident taxpayer using the Luxembourg income tax return (form 100). To do so, they must check box 319 on the form 100 and enter their income threshold in the fields 320 to 322 of the same form.
As of the tax year 2018, non-resident married taxpayers, employees or pensioners, can also opt to be treated as resident taxpayers and have a tax rate stated on their tax card. Taxpayers who make this choice are also required to file a tax return.
The application for registration of the rate on the tax card can be submitted online without LuxTrust authentication (Application for individualisation / RTS rate), or by sending a specific request to the relevant tax department.
Non-resident taxpayers who opt to be treated as a resident taxpayer are required to declare all of their worldwide income (foreign and domestic).
Foreign income is, in principle, excluded from the tax base in Luxembourg, in accordance with double taxation treaties. However, it is added to the taxable income in Luxembourg for the purpose of determining the tax rate.
It should be noted that foreign income (positive or negative) is determined in accordance with Luxembourg tax provisions.
By opting to be treated as a resident taxpayer, the non-resident taxpayer can claim the same tax deductions, allowances and tax credits as resident taxpayers (see "Income tax deductible expenses").
A "single" taxpayer with a child in their household who benefits from a tax reduction for children can also claim the single-parent tax credit (crédit d'impôt monoparental - CIM).
When a non-resident is treated as a resident for tax purposes, the Luxembourg Inland Revenue makes 2 calculations:
In practice, opting to be treated as a resident for tax purposes will be worthwhile only if the non-resident taxpayer or their spouse or partner (having opted for joint taxation) has no or only very little income outside of Luxembourg during the tax year in question.
The taxation can be simulated using an online service.
Mr. and Mrs. XY are married and reside in Germany. They have the following income:
Determining the percentage of taxable income in Luxembourg in relation the worldwide income:
Total non-exempt net income x 100
Total of non-exempt and exempt income
40,000 x 100
40,000 + 12,500
= 76.19 %
Mr X cannot opt to be treated as a resident taxpayer since the taxable income in Luxembourg represents less than 90 % his worldwide income.
Mr. and Mrs. WZ are married without children and they reside in France in a residence that they own. The household's income is as follows:
In this example, the spouses' only taxable domestic income in Luxembourg is Mr. W's salary in Luxembourg (EUR 40,000).
Mr. W is taxable in Luxembourg for 100% on his worldwide income:
Total non-exempt net income x 100
Total non-exempt and exempt income
40,000 x 100
= 100 %
He can therefore apply to be treated as a resident taxpayer.
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)