Who must file an income tax return in Luxembourg?

WHO IS REQUIRED TO FILE AN INCOME TAX RETURN?

The obligation to file a tax return (tax base declaration) depends on the category of income, the amount of income and the tax situation of the taxpayer.

Resident taxpayers

Resident taxpayers are required to file an income tax return (Form 100) in each of the following cases:

When the taxable income exceeds 100,000 euros;
Where several remunerations liable to withholding tax on salaries and pensions are combined, the taxable income is greater than 36,000 euros for tax classes 1 and 2 or greater than 30,000 euros for tax class 1A. (This happens in particular when an employee has several employment contracts simultaneously, or if both spouses who are collectively taxable are employed, or if one spouse works and the other receives a retirement pension);
If the taxable income includes, in addition to income subject to withholding tax, income not subject to withholding tax amounting to more than 600 euros (e.g. rental income);
Where the taxable income consists partly or entirely of wages or pensions which are exempt from withholding tax or which are paid by employers or pension funds established abroad1;
Where the net income from movable assets subject to withholding tax exceeds €1,500;
Where the resident taxpayer has applied to be taxed collectively with their non-resident spouse and has been provisionally granted tax class 2;
When the taxable income includes more than 1,500 euros net of directors’ fees or royalties;
When the taxpayer is invited by the Administration to fill in an income tax return.

Non-resident taxpayers (cross-border taxpayers in particular)

A non-resident taxpayer is a taxpayer who has no tax domicile (no usual place of residence) in the Grand Duchy of Luxembourg. In particular, all cross-border workers are considered non-resident taxpayers.

Non-resident taxpayers must file an income tax return (Form 100) in the following cases:

Where the taxpayer has opted for equivalence² to resident taxpayers in establishing a tax rate on their tax withholding slip(s) taking into account the household income;
Where the taxpayer has been employed as an employee in the Grand Duchy for at least nine months of the tax year and has either a taxable income exceeding 100,000 euros or, in the case of several remunerations liable to withholding tax on salaries and pensions, a taxable income exceeding 36,000 euros for class 1 or 30,000 euros for tax class 1A;
Where their income from Luxembourg includes directors’ fees whose gross amount is greater than 100,000 euros;
Where the taxpayer has taxable income in Luxembourg which is not subject to withholding tax;
Where the non-resident taxpayer has requested to be taxed collectively with their resident spouse and they have provisionally obtained tax class 2;
Where the taxpayer is asked by the administration to fill in an income tax return.

In principle, the income tax return must be submitted to the administration no later than 31 March of the year following the taxation year(e.g. the income tax return for the year 2018 must be submitted to the administration no later than 31 March 2019).

Taxpayers who are not obliged to file an income tax return may still have the option of submitting one in certain cases or alternatively of drawing up a simplified declaration called an annual statement.

1 These are remunerations paid by employers or pension funds established abroad which are not subject to Luxembourg withholding tax (pursuant to Article 28 of the Grand-Ducal Regulation on the procedure for withholding tax on salaries and pensions).

² Non-resident taxpayers may apply for equivalence to resident taxpayers if they earn at least 90% of their worldwide income in the Grand Duchy of Luxembourg (the rate is reduced to 50% for Belgian residents) or if the sum of their net income received outside Luxembourg is less than 13,000 euros. For married non-resident taxpayers, it is sufficient for one of the spouses to meet the 90% threshold or for the sum of their income received outside Luxembourg to be less than 13,000 euros. Taxpayers must apply to benefit from this scheme.

THE ANNUAL STATEMENT

If the resident or non-resident taxpayer does not meet any of the conditions listed above, the final possibility offered to regularise the situation is the annual statement.

This possibility is only available if the taxpayer:

Has been continuously employed in Luxembourg for 9 full months during the tax year

Has received at least 75% of their gross annual salary in Luxembourg.

For the resident taxpayer, there are two other possibilities:

They had his usual place of residence in Luxembourg throughout the tax year.
They declare all salaries received during the tax year (Luxembourg and foreign).