Cross-border worker in Luxembourg: what taxation?
Luxembourg has more than 220,000 cross-border workers from France, Belgium and Germany. Contrary to popular belief, there is no special tax regime for cross-border workers. Net salary calculation follows exactly the same rules as for Luxembourg residents: same tax brackets, same social contributions, same tax credits.
Same brackets, same contributions
As a cross-border worker, you are taxed at source in Luxembourg on your Luxembourg employment income. The rates are identical:
- Income tax: progressive scale from 0% to 42% depending on the bracket.
- Social contributions: 12.45% of gross (health 3.05%, pension 8%, dependency 1.4%).
- Employee tax credit (CIS): up to 600 EUR per year.
Tax class for cross-border workers
By default, unmarried cross-border workers are placed in class 1. Married cross-border workers can obtain class 2 if they opt for joint taxation and more than 90% of household income comes from Luxembourg. Otherwise, they remain in class 1. It is possible to request an annual adjustment via the tax return (form 100).
Bilateral tax treaties
To avoid double taxation, Luxembourg has signed tax treaties with France, Belgium and Germany. The general principle is that employment income is taxed in the country where the work is performed (Luxembourg). The country of residence then grants a tax credit or exemption to prevent the same income from being taxed twice. In practice, this means that your Luxembourg net salary is what you actually receive, without additional tax in your country of residence on this income.
Remote work and tolerance thresholds
Since 2023, specific agreements govern remote work for cross-border workers. The thresholds for remote work days allowed without changing the tax regime are 34 days for France and 34 days for Belgium. Beyond that, the income corresponding to days worked outside Luxembourg is taxable in the country of residence.