The Luxembourg Inland Revenue (Administration des contributions directes - ACD) is one of 3 tax authorities in the Grand Duchy of Luxembourg, alongside the Registration Duties, Estates and VAT Authority (Administration de l'enregistrement, des domaines et de la TVA - AED) and the Customs and Excise Agency (Administration des douanes et accises).
The main objective of the Luxembourg Inland Revenue is to implement the legislation related to direct taxation, such as:
- determining and collecting direct taxes (personal income tax, corporate income tax, business tax, withholding tax on wages, salaries and pensions, etc.);
- determining the basis of collection for property tax (tax valuation on all real estate properties in the country);
- determining and collecting various taxes and duties.
Resident and non-resident taxpayers who earn their income in Luxembourg may be subject to different tax obligations in Luxembourg.
In general, the taxpayer is only in contact with the 2 administration departments, the Taxation department (which sets the tax rate) and the Revenue department (which collects the tax). Thus, apart from the Audit department, the Luxembourg Inland Revenue consists of 3 supervisory departments.
The management of the Inland Revenue is in contact with taxpayers when dealing with legal actions in case of a claim regarding tax returns. Furthermore, it takes decisions regarding applications for reconsideration.
Taxation departments establish the tax rates for the taxpayer. The departments are divided into different sections.
This section consists of 8 offices. Each section is responsible for a part of the country or an economic sector.
Natural persons section
This section consists of 28 offices located throughout the country. Each one is responsible for a different part of the country. They centralise the income tax declarations for resident and non-resident taxpayers. An officer is responsible for issuing tax returns and determining the advances to be paid, where applicable.
Section for withholding tax on wages and salaries (RTS)
This section consists of 6 tax offices, which are responsible for the following:
- drawing up tax cards and calculating the withholding tax on wages and salaries of employers and pension funds;
- determining and registering the following on the tax cards: tax reductions, changes to the tax class and deductions on taxable income;
- calculating the annual statement for employees and pensioners. If the taxpayer does not have to make a tax declaration, he may choose the annual statement and complete a tax adjustment application on wages via an annual statement.
Section on real estate valuations
The section on real estate valuations is responsible for carrying out fiscal analysis of all developed and undeveloped real estate in the country, in order to determine the land tax to be paid.
The revenue department consists of 3 offices which are presided over by an officer. They collect taxes as well as tax advances, and send payment notices to tax debtors. The officer also reports potential delays in payment in order to initiate forced collection procedures.