All individuals who receive any income – be it salary, pension, royalties, income from renting an apartment, etc. – pay the income tax.

To determine the levy rate, first, find the total annual income after deducting all social contributions of around 12%:

From 200,004 euros per year and more – 42% income tax.

From 11,265 and up to 200,004 euros – 8% to 42% income tax on a progressive scale.

Who pays the income taxes

The first thing to remember is that the amounts of payments are different for residents and non-residents. The status of tax resident is not automatically assigned when receiving a residence permit. 

Residents pay taxes in Luxembourg from any source of income anywhere in the world, no matter where that source is located.

Non-residents only pay taxes on the income earned in Luxembourg.

What are the tax regimes for residents and non-residents

 How to determine your tax residency

Being in one taxpayer class or another directly affects how much money you will pay to the state.

There are three categories of taxpayers in Luxembourg:

1 class — a single person, that is, any person who is not married.

1a class  — the intermediate category that includes single parents and people over the age of 65.

2 class — the reduced category, that is, spouses or couples with a registered partnership. This class remains in effect for 3 years after a divorce or the death of a spouse.

How to determine your class

Another levy under an odd name is an obligatory supplement to income tax. It ranges from 7% to 9% of the tax paid amount:

 for individuals earning more than 150,000 euros in 1 and 1a classes or more than 300,000 euros in 2 tax class;

Solidarity tax

The fiscal year in Luxembourg runs from January 1 to December 31.

All residents and non-residents must report their taxes. The exceptions are made for 1 and 1a classes, who receive less than 100,000 euros per year from a single source, such as a retirement pension.

The declaration must be filled out in paper form and sent to the Luxembourg Tax Office (ACD) or submitted online.

Select your tax status – resident or non-resident.

Follow the on-screen instructions in your next steps.

How to file your tax return

There are quite a few of them: property tax, investment income tax, transportation tax, property sales tax on movable property and real estate, VAT, an excise tax, welfare contributions, etc.

All consumers pay VAT for the purchase of goods, it is always included in the final price. In Luxembourg, it is equal to 17%.

Social contributions are paid by everyone to maintain the health insurance system.

When selling movable and immovable property, there may be reduced tax regimes.

What other taxes are there

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