A withholding tax card or "tax card" is a document necessary for the employer or the pension fund to withhold taxes at source on salaries or pensions. It provides information about:
- the employee's or pensioner's tax class; or
- the fixed withholding tax rate; or
- a projected rate for married taxpayers who have chosen a joint taxation, a pure individual taxation or an individual taxation with reallocation.
Who is concerned
Persons employed in Luxembourg or pensioners who receive a statutory retirement pension taxable in Luxembourg must, in principle, have a tax card because income from a salaried occupation and pensions paid by a Luxembourg pension fund are subject to tax withholding.
The taxes withheld by the employer or the pension fund, are made in accordance with the tax scale or the rate indicated on the card.
The withholding tax on salaries 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 Center (Centre commun de la sécurité sociale - CCSS) within, on average, 30 working days.
The following must always use form 164 for their first request for the withholding tax card:
- 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. The tax card 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 tax card for non-resident employees or pensioners is issued by the competent tax office (Non-residents RTS office) of the Luxembourg Inland Revenue. As a general rule, the taxpayer's current commune of residence determines which RTS office is competent.
Changes in personal or professional circumstances
The tax form is updated automatically by the Luxembourg Inland Revenue (ACD) within an average of 30 working days if any of 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).
Tax cards are not affected by civil partnerships.
Updates in non-resident taxpayers' address or marital status (marriage, divorce, separation, death) must be notified by the salaried worker or pensioner using form 164 NR, which should be submitted to the Non-residents RTS office.
The taxpayer who gets married during the year has the marital status changed and is taxable according to the scale of the tax class 1. If both spouses earn taxable income in Luxembourg, each spouse is taxed separately only on their own income. This is done without taking into account their children or their age.
However, non-resident taxpayers may be treated as resident taxpayers for tax purposes upon request and subject to fulfilling the conditions of assimilation. The non-resident married taxpayers will have the same rights, deductions, allowances and credits as resident taxpayers and may claim:
- joint taxation of the domestic and global common income of both spouses in order to determine the tax rate in accordance with tax class 2; or
- pure individual taxation of each spouse's own domestic and global income in order to determine the tax rate in accordance with tax class 1; or
- individual taxation with reallocation of income between spouses in order to determine the tax rate in accordance with tax class 1.
For the fiscal year 2018, the choice of the method of pure individual taxation or individual taxation with reallocation can be made until 31 March 2019. Past that date, the choice made becomes irrevocable.
Different estimated rates can be calculated 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 class 2.
These changes in the tax class on the withholding tax card take effect from the date of marriage, of the processing of the request for joint or individual taxation, or, where applicable, the birth (or adoption) of the child. The withholding tax can be rectified following the submission of the new form to the employer or the pension fund.
Special case: salaried employees who have accommodation in Luxembourg and abroad
This applies, for example, to employees living in Belgium who have accommodation (pied-à-terre) in Luxembourg during the week and return to their family in Belgium on weekends and holidays.
Regardless of their address, natural persons are theoretically considered non-resident taxpayers in Luxembourg as long as they possess a centre of vital interests abroad, outside Luxembourg.
Taxpayers receive a tax card as a resident employee (address in Luxembourg). If their vital interests are abroad, they have to apply for a tax card for non-residents to the RTS tax office - Non-residents.
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 (Non-residents RTS Office) using form 164 NR 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 (1st 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 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 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 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 NR, to have the main card changed to 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.
The 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 NR) to have certain tax reductions 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 the net income.
Non-resident taxpayers, for example, have the possibility to request the following listings if their tax card shows a tax class or a fixed tax rate:
- additional business expenses (frais d'obtention - FO);
- extraordinary expenses for children who do not form part of the taxpayer's household;
- 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);
- the tax allowance for sustainable forms of transport.
Other extraordinary expenses (illness, relatives in need, disability, household staff expenses, childcare expenses, etc.) may be taken into account but only if the non-resident opts to be treated as a resident for tax purposes and files a tax return.
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 listings on the tax card is that they allow 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.
These changes only have an effect on the amount of tax deducted at source, the tax due at the end of the year will not be affected. The amount of tax deducted at source during a fiscal year may occasionally be too high or too low. The difference can be refunded or recovered retroactively during the year following the fiscal year, either through taxation by assessment (model 100 - tax return) or by 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 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.
Tax cards are not affected by civil partnerships.
Requesting a duplicate tax card
Please note: the withholding tax card is not to be confused with:
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 %.
Forms / Online services
Demande en établissement, rectification, inscription d'une modération ou établissement d'un duplicata d'une fiche de retenue pour contribuables non résidents (modèle 164 NR F)
Demande en établissement, inscription d'une modération ou rectification d'une fiche de retenue d'impôt pour contribuables non résidents-FR (formulaire 164 NR/EM)
Antrag auf Ausstellung, Berichtigung, Eintragung einer Ermäßigung oder Ausstellung eines Duplikates einer Steuerkarte für nicht ansässige Steuerpflichtige (Vordruck 164 NR D)
Antrag auf Ausstellung, Eintragung einer Ermäßigung oder Berichtigung einer Lohnsteuerkarte für nicht ansässige Steuerpflichtige (Vordruck 164 NR/EM)