How does taxation and withholding tax work in Luxembourg?
In Luxembourg, taxation involves elements such as withholding tax on income, with the choice between joint and individual taxation. The tax rate is determined on the tax withholding card and can be adjusted during the annual tax return.
Some taxpayers may have to pay additional taxes, while others may be partially refunded depending on their situation. Withholding tax in Luxembourg works by deducting a portion of income tax directly from the gross salary of the worker before the net salary is paid by the employer.
The average tax rate, specified on the tax withholding card, is applied monthly to the taxpayer's salary. The choice between joint and individual taxation influences the final amount of tax to be paid or refunded during the annual tax return. This system aims to facilitate tax payment throughout the year rather than at the end of the fiscal year.
Some taxpayers may have to pay additional taxes, while others may be partially refunded depending on their situation. Withholding tax in Luxembourg works by deducting a portion of income tax directly from the gross salary of the worker before the net salary is paid by the employer.
The average tax rate, specified on the tax withholding card, is applied monthly to the taxpayer's salary. The choice between joint and individual taxation influences the final amount of tax to be paid or refunded during the annual tax return. This system aims to facilitate tax payment throughout the year rather than at the end of the fiscal year.
Updated on: 24/07/2024
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