Assimilation to a resident

• How can I be assimilated to a resident taxpayer?

  To be considered a resident, you must have met at least one of the following three conditions: At least 90% of the household income is generated in Luxembourg. For the purposes of calculating this percentage, the first 50 days worked abroad are treated as Luxembourg income (50 days of home office work, for example). The household earns less than €13,000 net income abroad (excluding Luxembourg). For Belgian residents only, if more than 50% of professional income is earned in LuxembourFew readers

• Is outstanding balance insurance paid in France also deductible?

  Yes, French premiums are fully deductible, as long as you can provide an annual certificate to prove the amount of premiums paid and you are treated as a Luxembourg tax resident.Few readers

• What does it mean to be ‘treated as a resident taxpayer’?

  Tax assimilation allows cross-border commuters to benefit from the same tax deductions as Luxembourg residents when they file their tax returns. To be assimilated to a Luxembourg resident, you must satisfy at least one of the following three conditions: Majority Luxembourg income : At least 90% of global income is taxable in Luxembourg. For this calculation, the first 50 days worked abroad (e.g. home office) are considered as days worked in Luxembourg. Limited foreign income : The houseFew readers

• Can I deduct the cost of a foreign health insurance ?

  Yes, premiums for a mutual insurance company are deductible, as long as you can provide an annual certificate to justify the amount of premiums paid and you are treated as a Luxembourg tax resident.Few readers

• What are the advantages of being assimilated to a resident?

  Assimilation allows the non-resident taxpayer to benefit from the same advantages as the resident. Being treated as a resident offers the possibility of deducting : special expenses extraordinary expenses or to benefit from a single-parent tax credit (which can lead to tax savings). However, this assimilation to resident status is not always the most advantageous tax option, as in some cases the deductions do not provide a sufficient tax advantage compared to the increase in the tFew readers

• What does the warning message about the assimilation of resident taxpayers mean and what should I do?

  The assimilation alert message appears on your account when the system detects that you do not automatically meet the criteria to be considered a Luxembourg tax resident. This information is important because assimilation status has a direct impact on your taxation: it determines your entitlement to certain tax deductions. Conditions for being considered a tax resident in Luxembourg To be considered a tax resident, you must meet at least *one of the following three conditions:Few readers

• Can I deduct insurance taken out in a foreign country?

  If you qualify as a Luxembourg tax resident, you can deduct your insurance premiums.Few readers

• Can one be considered a Luxembourg tax resident one year and not be considered so the following year?

  One of the conditions for being considered a resident must be met each year. Thus, it is possible to meet one of the residency conditions in one year and no longer meet it the following year.Few readers

• What is the tax assimilation of non-resident taxpayers to resident taxpayers?

  Assimilation is a Luxembourg tax regime that allows certain non-residents to be taxed as residents, in order to benefit from the same tax advantages (deductions, allowances, tax classes). An assimilated non-resident: is taxed on all of their income, like a resident; can benefit from tax deductions (loan interest, insurance premiums, special expenses, etc.); may have access to a more favorable tax class, notably tax class 2 for married couples. Main conditions AssimilationFew readers

• Does assimilation have an impact on taxation in the country of residence?

  No, it has no impact on taxation in the country of residence.Few readers

• Is it possible to challenge a decision of non-assimilation?

  If your income was not correctly taken into account by the tax authorities, you may challenge the decision by sending an appeal letter. However, if your income was correctly taken into account by the tax authorities and you do not meet any of the conditions for assimilation, then challenging the decision is pointless.Few readers

Married cross-border workers

• How do I get a fixed rate?

  To do this, you need to submit a request using form 166. You can download it free of charge here.* You should also include a copy of your last three payslips and, if necessary, any proof of other income. For more information, please contact your relevant RTS Office. You can find your RTS Office by using our free simulator&x20; *Unfortunately the form is only available in FrenFew readers

• When is the fixed rate advantageous?

  The fixed rate is advantageous when there is a significant difference in salary between the two spouses. If one spouse earns income in Luxembourg and the other abroad (Belgium, for example), the income from Luxembourg must be higher than the income from Belgium. If this is not the case, opting for the Luxembourg rate would not be advantageous, as it would only increase your tax rate! In this case, it is better to remain in tax class 1.Few readers

• What are the disadvantages of the fixed rate?

  If you opt for the fixed tax rate, you will have to file your tax return in Luxembourg every year. This is because tax will be regulated on the basis of the tax return. Once your tax return has been processed, your tax rate may be adjusted upwards or downwards. The tax rate is based on your income for the previous year. So if your salary rises or falls during the year, the tax adjustment when you file your tax return can sometimes be substantial. To avoid this, we recommend that you requesFew readers

• How is the fixed rate determined?

  Along with form 166, you will need to attach your last 3 payslips (for both spouses). The tax authorities will determine the applicable tax rate on the basis of the spouses' incomes and the deductions available to the couple. The aim is to adjust the rate as closely as possible to your income.Few readers

• What is a fixed tax rate ?

  A fixed tax rate refers to a tax percentage that is deducted directly at source from your salary. For married Luxembourg residents : one of the two spouses (usually the one with the higher income) is taxed according to tax class 2, while the other receives a fixed tax rate of 15% at source on their salary. For married cross-border commuters : the fixed tax rate is the equivalent of tax class 2 applied at source. This tax rate depends on your income and is not always automatically aFew readers

• Is the fixed tax rate mandatory for married cross-border workers?

  No, as a married cross-border couple, you are not required to opt for the fixed tax rate. You may remain in tax class 1 at source and subsequently request (or not) joint taxation and the application of tax class 2 by completing your tax return.Few readers

• How can I know if I am eligible for a fixed tax rate as a married cross-border worker?

  All married cross-border workers who meet at least one of the conditions for assimilation are eligible for a fixed tax rate.Few readers

• Can I revoce the fixed tax rate after having requested it?

  Yes, you can request the revocation of the fixed tax rate at any time by completing Form 166.Few readers

• Is the fixed rate automatically recalculated each year by the Luxembourg tax administration?

  In general, your fixed tax rate is not automatically recalculated each year by the tax administration. However, the flat rate may sometimes be recalculated following the processing of your tax return, if you have a significant amount of tax to repay.Few readers

• Can single cross-border workers apply for a fixed tax rate?

  No, the fixed tax rate is reserved for married cross-border couples.Few readers

• What happens if the chosen fixed tax rate is too low compared to my actual income?

  If your fixed tax rate is too low compared to your actual income, you will have to pay additional tax when your tax return is processed. The tax authorities may potentially adjust the tax rate based on the tax return you have filed.Few readers

Home Office

• Home office: tax and social security rules, etc.

  Concerning the tax threshold For Belgium, France and Germany, the tax tolerance threshold is 34 days. After this threshold, the remuneration corresponding to the teleworking days becomes taxable in the country of residence. Example: Paul lives in Belgium and teleworks 60 days in 2024. The remuneration for these 60 days corresponds to 25,000 euros. These 25,000 euros will be exempt in Luxembourg and fully taxable in Belgium. Concerning the social security threshold Cross-border commutPopular

• Does home office affect assimilation?

  Yes, home office has an impact on assimilation. To be considered a resident, you must meet at least one of the following three conditions: At least 90% of the household income is generated in Luxembourg. For the purposes of calculating this percentage, the first 50 days worked abroad are treated as Luxembourg income (50 days of teleworking, for example). The household earns less than €13,000 net income abroad (excluding Luxembourg). For Belgian residents only, if more than 50% of prFew readers

• Where do I indicate the amount for overtime home office days spent abroad?

  Indicate the amount corresponding to the excess home office days in the "Salaries" form under "Exemptions" in the "Amount for home office days abroad" field.Few readers

• Is social security affected if I exceed the authorized homeoffice threshold?

  Yes, if you work at home for more than 50% of the time, you will be affiliated with the social security system of your country of residence.Few readers

• Do I have to declare all my foreign income even if I am a cross-border worker?

  If you wish to benefit from assimilation and thus be entitled to the same advantages and deductions as a person residing in Luxembourg, you must declare your worldwide income, i.e. income from Luxembourg and from abroad, in your Luxembourg tax return.Few readers

• Can home office from abroad call into question my assimilation to resident status?

  Yes, home office from abroad will be considered as foreign income if you exceed the legal threshold. As a result, this foreign income will be taken into account to determine whether you meet (or do not meet) one of the conditions for assimilation.Few readers

• How is a life insurance policy taxed if I am a non-resident ?

  If you hold a life insurance policy, this income is only taxable in your country of residence and is therefore completely exempt from tax in Luxembourg. The tax rules will therefore vary depending on the fiscal legislation of the country. You can find all the relevant regulations for the three neighbouring countries by following the links below: For France: LINK (https://www.economie.gouv.fr/particuliers/gerer-mon-argent/gerer-mon-budget-et-mon-epargne/quelle-est-la-fiscalite-de-lassuraSome readers

• How can I indicate household and childcare costs as a French cross-border commuter?

  For French cross-border commuters, you should deduct the tax credit you received in France. Even if you have no income from France, you are required to file a French tax return. This is an obligation for French residents, but it can be advantageous for you if you have incurred childcare and/or household expenses. What deductions are you entitled to? Childcare costs You are entitled to a 50% tax credit, capped at €1,750 per year per child under 6. ExampleSome readers

• Which documents should I upload for income from France?

  There are two ways of proving your French income: Add a copy of your French tax return Add a copy of your most recent payslip, showing the total for the year.Few readers