Why does tax class 2 matter?
In Luxembourg, tax class 2 is assigned to married taxpayers or those in a registered partnership (PACS) who opt for collective taxation. It provides access to the income splitting method: the household's taxable income is divided by two before applying the progressive tax scale, then the tax is multiplied by two. This mechanism significantly reduces the tax burden, especially when the couple's incomes are unequal.
In short: Tax class 2 can save a cross-border couple several hundred euros per month. It is one of the most important tax levers for non-resident workers.
Conditions for obtaining class 2 as a cross-border worker
Cross-border workers (residents of France, Belgium or Germany) do not automatically receive tax class 2. They must meet several cumulative conditions:
1. Be married or in a PACS
The marriage or registered partnership must be recognised in Luxembourg. Unmarried couples are not eligible.
2. Opt for collective taxation
Both spouses must jointly request to be taxed collectively in Luxembourg.
3. Meet the 90% rule
At least 90% of worldwide income must come from Luxembourg (threshold lowered to 50% of household professional income for Belgian residents).
4. Not be separated
The spouses must not be de facto separated and must live together as of 1 January of the tax year.
The 90% rule in detail: The threshold is assessed on each taxpayer's own income; it is enough for one of the spouses to meet the condition. Two alternatives exist: the condition is also deemed met if net income not taxable in Luxembourg stays below EUR 13,000 per year; and for Belgian residents, it is sufficient that more than 50% of the household's professional income is taxable in Luxembourg.
How to apply
The application for tax class 2 for non-residents is made via form 166 ("Application for the application of tax class 2 withholding"), to be submitted to the Administration des contributions directes (ACD).
Steps:
- Download form 166 from the ACD website (guichet.lu)
- Fill it in with information for both spouses (income, employer, country of residence)
- Attach supporting documents: income certificate from the country of residence (tax assessment notice, certificate from the foreign tax authority)
- Send the complete file to the ACD (by post or via MyGuichet.lu)
- The ACD will issue a tax withholding card showing class 2
The application must be renewed each year. It is advisable to submit it at the beginning of the year to benefit from class 2 from the first payslips.
The concrete advantage: a worked example
Let's take the example of a cross-border employee earning a gross salary of EUR 6,000/month, whose spouse does not work. The figures below are provided for indicative purposes only; exact amounts depend on your personal situation.
Tax class 1 (single)
Estimated net salary: ~EUR 4,200/month
Higher tax withholding, no income splitting
Tax class 2 (married, collective taxation)
Estimated net salary: ~EUR 4,600/month
Income splitting, reduced withholding
Estimated difference: approximately EUR 400/month, or ~EUR 4,800/year. These figures are indicative and vary according to deductions, tax credits and family situation.
It is recommended to consult the ACD or a tax adviser to accurately assess the benefit for your personal situation.
Special cases
The situation varies depending on the couple's configuration. Here are the most common cases:
| Situation | Class 2 possible? |
|---|---|
| Both spouses work in Luxembourg | Yes — 100% of income comes from Luxembourg |
| One spouse in Luxembourg, the other without income | Yes — the 90% rule is met |
| One spouse in Luxembourg, the other works in France/Belgium/Germany | Depends on the 90% rule — if foreign income exceeds 10% of the total, class 2 is not granted |
| One spouse in Luxembourg, the other has a small foreign income | Possible — if foreign income stays below 10% of the worldwide total |
| Unmarried / no PACS couple | No — class 2 is reserved for married or PACS couples |
If in doubt about your eligibility, it is recommended to consult the ACD or a tax adviser for your personal situation.
Form 100: the annual tax return as an alternative
Even if you do not have class 2 on your tax withholding card (for example because you did not apply in time), you can regularise your situation via the annual tax return (form 100).
By filing form 100, you can request collective taxation and class 2 treatment retroactively. The ACD will recalculate your tax for the entire year and refund any overpayment.
Tip: Even if you already have class 2 on your withholding card, it may be worthwhile to file the annual return to benefit from additional deductions (mortgage interest, commuting costs, special expenses, etc.).
Simulate your salary in class 2
Use our simulator to compare your net salary in class 1 and class 2. You will immediately see the difference on your payslip.