Completing any tax return, let alone in a different country, can be a confusing prospect. Laura Foulds, Managing Director of Analie Tax & Consulting, has put together this short guide to assist you in completing your annual tax return in Luxembourg.
See also the City Savvy Guide: Luxembourg Tax Basics which complements this guide and contains additional information that you might find useful.
Luxembourg residents are individuals who have permanent accommodation available to them in Luxembourg or who plan to stay for at least 6 months. They are taxed on their worldwide income from all sources.
Luxembourg non-residents are individuals who do not meet the criteria for residency or, in some cases, are considered resident in another country under the terms of a tax treaty. They are taxed on income from Luxembourg sources, unless they elect to apply the resident regime when they are taxed as if they were resident. Care should be taken where one spouse is resident and one is not and/or one spouse is working in Luxembourg and the other is not as elections may or may not be beneficial in these specific cases.
Form 100: Income Tax Return
This is the main form that you have to file when you meet one of the conditions for mandatory filing (e.g. your income is over €100,000 (€36,000 if married and both spouses are working, you have income not subject to tax withholding etc.). The form is used for resident and non-residents and is split into sections as follows:-
Pages 1 – 3: Information pages
Page 1: this is general information such as name/address. If you moved address during the year, you have to state your previous address in addition to your current address. If you moved many times, it is best to add a schedule to the return stating the dates where you were at each address.
Page 2: this is where you would report any children in your household and claim certain allowances/credits in respect of your children.
Page 3: here you make various elections depending on your situation e.g. joint filing for registered partnerships, for non-residents electing for the resident regime etc. Analysis is often required to determine if these elections are beneficial.
Pages 4 – 11: Income pages
There is essentially a page for each of the 8 categories of income. Each page follows the same basic format; the first section reports income and the second section reports deductions. Each page has 4 columns; the first two columns are for reporting Luxembourg income and the second two columns are for reporting foreign income. Columns 1 & 3 are for the first taxpayer on Page 1 of the form, Columns 2 & 4 are for the spouse/partner.
Pages 4 & 5: these are for commercial and agricultural/forestry income so would not normally be completed in most cases for expatriate workers in Luxembourg.
Page 6: self-employed workers, including lawyers, doctors etc. would report their income on this page. There are normally some additional pages to be attached to the return that show details of revenue, expenses, depreciable assets etc., but these vary by profession. Director’s fees are also reported on this page.
Page 7: this page is the most commonly seen for expatriates as this is where employment income is reported. For Luxembourg employees, most of the information will come directly from the year end remuneration certificate issued by each employer. A copy of the remuneration certificates should be attached to the return when filing. For non-Luxembourg income, you may need to provide additional schedules/papers showing the income received and reported on this page.
Page 8: here you would report income received from pensions so, again, not typically seen for expatriates working in Luxembourg.
Page 9: this is where you report income from movable capital (investments) so interest and dividends. Additional forms may be required depending on the nature of your investments.
Page 10: this is where you report rental income from property. Again, you may be required to attach additional forms to the return to show the breakdown of expenses, depreciation etc. The second half of this form is where you claim the mortgage interest deduction for owner-occupied property.
Page 11: this is the catch-all page for “miscellaneous” income. Any income taxable in Luxembourg that has not been reported on the previous 7 pages should be included here. The most commonly seen item on this page is Capital Gains.
Page 12: Extraordinary income
Certain income may be subject to reduced tax rates in specific cases – in such cases the income is reported on this page.
Pages 13 – 15: Deductions
Pages 13 & 14: these are where you claim the majority of the available deductions including your deductible social security payments. It is important to attach proof of each item that you are deducting to your tax return.
Page 15: this is where you claim additional deductions for children living outside your household where you provide more than 50% of the support and also for household/childcare costs.
Page 16: Summary
Page 16: this page summarises the net income and deductions reported on each of the previous pages into one short summary. This is also the page where you sign your tax return before you file it!
Form 163: Décompte Annuel
If you are Luxembourg resident, but do not have a mandatory filing obligation but you are entitled to a refund of taxes, potentially due to available deductions, you complete Form 163 and not Form 100. It has a strict deadline of 31 December following the tax year and will not be processed if filed after this date.
Page 1: this is largely the same as for Form 100, but has an additional section at the end to detail your working history for the year.
Page 2: this is, again, basically the same as for Form 100.
Page 3: this page is different to Form 100 and is where you claim deductions against employment income.
Pages 4 -6: again, these are largely the same as for Form 100 and are where you claim your deductions. Don’t forget to sign the form on Page 6!
Before filing the form, remember to attach documentation/proof of payments made for any deductions you are claiming.
Form 163NR: Décompte Annuel Non-Résident
This form is essentially the same as the Form 163, but it is for non-residents only. So, if you are non-resident and you do not have a mandatory filing obligation but you are entitled to a refund of taxes, you complete Form 163NR and not Form 100 or Form 163. As with the From 163, it has a strict deadline of 31 December following the tax year and will not be processed if filed after this date.
Pages 1 & 2: these are the same as Form 163.
Page 3: this is where you claim any available deductions.
Page 4: this is where you make any applicable elections for joint filing etc. This is also the page where you sign!
As with the other forms, before filing the form, remember to attach documentation/proof of payments made for any deductions you are claiming.
This is a general guide and is not intended to cover specific situations. Tax, especially for expatriates, is complicated and tax legislation and interpretations change frequently so this guide should not replace personal consultation. If you have any questions regarding your personal income taxes or would like more information on a specific point, please contact Laura Foulds at Analie Tax & Consulting.
Feature photo: Victor1558/flickr (file)