Principle of withholding tax in Luxembourg
In Luxembourg, the tax on employees’ income is withheld directly by the employer.
To withhold tax at source and / or possibly pay the tax credit to the employee, the employer must hold a tax card. The employee must therefore return it to his employer upon receipt by the administrative services.
The tax card or tax deduction sheet identifies the tax class of the employee or pensioner.
Tax deduction sheet or tax card
Each job or pension is subject to a tax card or “fiche de retenue d’impôt”.
These tax deduction sheets are issued by the Administration des Contributions Directes (ACD) once a year at the beginning of the year or in the event of a change of personal situation (marriage, birth of a child, etc.).
The resident taxpayer employee who occupies for the first time a job in Luxembourg sees his tax deduction form issued without intervention and without his request by the Direct Taxation Administration, after affiliation to the CCSS directly by his employer, in a maximum of 30 working days.
All tax deduction sheets must be sent by post to the employee’s home.
In the absence of a tax deduction sheet, the employer will arbitrarily apply the tax class and the most expensive withholding tax rate. This rate will be rectified upon receipt of the form by the employer. It is therefore important that she be in possession as soon as possible.
In principle, the tax deduction sheet is not necessary for pupils or students working during the school holidays, with an hourly wage net of taxes and social contributions of less than 14 euros, people working in a private household as housekeeper, babysitter or care assistant.
Application for a tax card
In the event of non-receipt of the tax card by a resident employee or pensioner, he / she must contact the appropriate RTS office according to his / her place of residence.
Non-resident employees (cross-border workers) working for the first time in Luxembourg must ask for the tax withholding sheet at the non-resident RTS office in Luxembourg, 5 Rue de Hollerich . The following years, he/she will automatically receive a form to complete in order to receive the following tax cards.
Even if wages are taxed at source, you still have to report all your income once a year to the tax authorities. To find out more about the Luxembourg tax return, click here.