Individual Tax Reform – Non-resident taxpayer and separate taxation


2017 Individual Tax Reform – Non-resident taxpayer and separate taxation: New announcements and practical modalities

6 October 2017

Luxembourg Tax Alert

Following the newsletter issued by the tax authorities on 3 October 2017 and following our previous tax alert, new guidelines regarding the taxation of non-residents and practical modalities for separate taxation and 2018 tax card have been published.

Action required by 31 October 2017:

  • Non-resident taxpayers will receive a letter from the Luxembourg tax authorities, which may contain a proposed tax rate (for their 2018 tax card) if the tax authorities have sufficient information in their file.
  • Non-resident taxpayers are free to accept or not the proposed tax rate that would be applied on the 2018 tax card.

Taxation of non-resident taxpayers

The announcement clarifies the conditions that non-resident taxpayers need to fulfil to be assimilated to a resident taxpayer. In a nutshell:

  • At least 90 percent of worldwide income should be taxable in Luxembourg (at the taxpayer level working in Luxembourg).

    Besides, flexibility should be foreseen for professional income in relation to the first 50 days worked outside of Luxembourg, i.e. this income would be regarded as taxable in Luxembourg for assimilation purposes (90 percent). This still needs to be confirmed by the tax authorities/parliament.

    For taxpayers with less than 13.000 EUR of net income non-taxable in Luxembourg (other than Luxembourg professional income). This still needs to be confirmed by the tax authorities/parliament.
  • Where at least 50 percent of professional income of the household is taxable in Luxembourg for Belgian residents.

Fulfilling these conditions or not will have a direct impact on the applicable tax class and tax rate.

Separate taxation

  • Separate taxation will be possible for resident and non-resident married taxpayers. As a reminder, the taxpayers can opt for separate taxation as of today until 31 March 2019, for the tax year 2018.

The new measures, timelines and practical modalities are explained in more details in the enclosed overview.

You will find information and examples on the tax authorities’ website.

For more information, do not hesitate to contact our team. We will be happy to assist you.

You will find all the information relating to the 2017 tax reform on our dedicated webpage.

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