Income Tax Return Guide
Filing your tax return in Luxembourg can raise many questions, especially if you’ve recently moved there.
This guide walks you through the process step by step to help you understand who is required to file, what income to include, and how to file your return correctly.
Why file a tax return?
What is the purpose of a tax return?
The tax return allows the tax authorities to accurately recalculate your tax liability based on your actual circumstances.
It takes into account all of your income, as well as the deductions and tax credits to which you are entitled. Following this calculation, you may either owe additional tax or be eligible for a refund.
For more details on tax rules and to better understand taxation in the Grand Duchy, consult our comprehensive guide on the subject by following this link to our guide to taxation in Luxembourg; you’ll find all the necessary information there.
Is filing a tax return mandatory?
In Luxembourg, individuals and businesses are liable for several taxes, including income tax. They must therefore file an annual tax return.
This return must be filed no later than December 31 of the year following the receipt of income.
Unlike in other countries, filing a tax return is not automatically mandatory for all taxpayers in Luxembourg. It becomes mandatory in certain situations (income exceeding 100,000 euros, multiple sources of income in addition to professional income, etc.).
It is also strongly recommended in many cases to optimize one’s tax liability.
Income Tax Return: Who Needs to File?
As a reminder, taxes in Luxembourg are withheld at source from income paid. Through the income tax return, the tax authorities have accurate information about your income received in the past year and the final amount of tax due, based on your return.
Following your return, the tax authorities will make adjustments through additional tax payments or tax refunds. The authorities may also request additional information based on your return if it appears incomplete or incorrect.
Income Tax Return for Luxembourg Residents
Residents are individuals whose tax domicile is in Luxembourg; in other words, and more broadly, their primary residence.
What income must be reported if you are a resident of Luxembourg?
If they fall into one of the categories mentioned above, individuals residing in Luxembourg must report all of their income to the Luxembourg tax authorities, regardless of the source of that income, including foreign income.
The Luxembourg tax authorities will calculate a global tax rate based on all of this income, including foreign income. This “ ” rate will then be applied solely to Luxembourg-sourced income.
Double Taxation in Luxembourg for Luxembourg Residents
In certain cases, if a Luxembourg resident earns income in another country, they may be subject to double taxation. A bilateral tax treaty may also govern the conditions for applying this double taxation.
Under a tax treaty between two countries, the global tax rate will apply only to your Luxembourg income. If you receive income in different countries, check with the tax authorities of the countries concerned.
Taxation of Non-Residents on Luxembourg Income
Non-residents of Luxembourg are taxable only on their Luxembourg-sourced income. If they meet certain criteria , non-residents may choose to be treated as residents for tax purposes, thereby gaining access to all available deductions.
In the vast majority of cases, non-residents are treated as cross-border workers. Like residents, taxes for cross-border workers are withheld at source. At the end of the year, the non-resident taxpayer must file an income tax return.
Double Taxation Agreements
Luxembourg has signed double taxation treaties (DTAs) with many countries around the world.
These treaties ensure that individuals and corporations receiving income from different countries are not taxed twice on the same income. Under these tax treaties, individuals and businesses benefit from tax relief, such as a credit for taxes paid in the other country.
In any case, we recommend consulting a tax expert, at least for your first tax returns. This will help you better understand Luxembourg’s tax system and the measures applicable to your personal situation.
How do you file your taxes in Luxembourg?
Generally in February, each taxpayer receives by mail a paper tax return form or an invitation to file their income electronically.
The tax return can be filed:
- on paper using the appropriate form(s) sent by the tax authorities
- online instead of using the paper return, for greater convenience.
Simply fill in the various sections with the information you have on hand that applies to your situation.
Optimize your tax situation in Luxembourg with expert advice.
Key steps for filing your tax return
To make the process easier, here are the main steps:
- Gather your pay stubs, bank statements, and supporting documents
- verify your family status and tax bracket
- Report all your income (in Luxembourg and abroad, if applicable)
- Include your deductible expenses
- Review and confirm your tax return before submitting it.
File your taxes online in Luxembourg
Filing your taxes electronically couldn’t be easier. Log in to the guichet.lu website, select your status(resident or non-resident), then follow the instructions.
Guichet.lu, the Luxembourg government’s administrative guide, has also posted a step-by-step tutorial to help you file your taxes. Guichet.lu also offers a very practical explanatory video to assist you throughout the entire process of filing your taxes online.
Your return must be validated using a digital identity verification method.
When should you file your Luxembourg tax return?
Luxembourg uses the calendar year for income tax purposes, from January 1 to December 31.
Income for the year must be reported to the tax authorities by December 31 of the following year at the latest. This deadline also applies to corporate income and wealth tax and business tax. Failure to meet these deadlines may result in penalties or interest charges.
What must be reported on a tax return?
On their tax return, taxpayers must report all income earned in the previous year and all expenses eligible for a deduction or tax credit
All reported income and expenses must be supported by official documents in French, German, or Luxembourgish. The various organizations and agencies with which you are in contact (employer, various funds, insurance companies, service providers) will send you the necessary reporting documents in due course—usually at the beginning of the year. Please do not hesitate to follow up with your service providers if you do not have these documents.
Income to be reported in Luxembourg
There are 8 categories of taxable income for individuals:
- salary income
- income from self-employment, including directors’ fees
- income from commercial activities
- Income from agriculture or forestry
- income from investments in securities
- property and rental income
- income from retirement pensions, alimony, etc.
- miscellaneous income.
Expenses eligible for tax deductions or credits
For each of these categories, the taxpayer may deduct certain expenses to arrive at net income.
Taxpayers are also eligible for tax deductions and credits, including:
- employment-related expenses: individuals may deduct certain expenses from their taxable income, such as work-related travel expenses
- childcare expenses or alimony paid in the event of divorce
- pension contributions
- charitable donations
- ...
Taxable income will be calculated based on the total of these amounts: income and expenses. The tax due will then be calculated on this taxable income in brackets.
Payment of income tax in Luxembourg
Taxation in Luxembourg by tax brackets
Currently, Luxembourg applies three tax brackets based on personal and family circumstances:
- Class 1: Single persons without children
- Bracket 1a: Single individuals with children, widows, or seniors
- Class 2: Married couples or partners taxed jointly
This system allows couples to benefit from a tax calculation that is often more favorable thanks to joint taxation.
Depending on your situation, you fall into one tax class or another. The tax withholding form issued by the tax authorities determines your tax class. The tax class defines how your tax is calculated based on your total income.
More information on tax brackets on this page.
Tax reform planned for 2028
A major reform will take effect starting in 2028. It calls for the elimination of the three current classes (1, 1a, and 2) in favor of a single tax class, called “Class U.”
The goal is to simplify the tax system and ensure greater fairness among taxpayers, regardless of their family or marital status.
This reform also involves a shift toward more individualized taxation. A transitional period is planned for certain households currently in class 2 to avoid adverse impacts
Choosing a type of union may or may not improve your tax situation in Luxembourg. Learn more here about the tax implications for couples in a common-law marriage, civil partnership, or marriage.
How is your taxable income calculated?
Like many countries, Luxembourg applies a progressive tax system to reported income. Tax rates increase with income level, regardless of the source. According to the latest progressive tax schedule, tax rates range from 0% (annual income below €13,200) to 42% (annual income above €235,000).
The taxes paid by taxpayers are used to fund various government expenditures in areas such as security, transportation, and healthcare.
Learn more about the tax system and personal income tax.
Tax Assessment and Payment in Luxembourg
Once your taxes have been calculated,the Direct Tax Administration will send you your tax notice. This will inform you of the amounts owed to the tax authorities or any refunds due to you. You will be asked to pay the amounts owed as soon as possible.
Tax amounts due will be debited directly from your bank account. Similarly, if you are due a refund, it will be deposited directly into the bank account you previously provided to the tax authorities.
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