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Luxembourg tax cards
Luxembourg is known for its favorable tax system and the presence of numerous multinational corporations. One of the key features of the country's tax system is the Luxembourg tax card, which serves as an important document for both residents and non-residents working in Luxembourg. The tax card provides crucial information about an individual's tax status, including their tax class and available deductions.
This article will delve into the details of obtaining and using the Luxembourg tax card, and how it works to help individuals navigate the country's tax system. Whether you're a foreign worker looking to work in Luxembourg or a resident trying to understand your tax obligations, getting a tax card is an important step in financial planning.
What is a Luxembourg tax card
The Luxembourg tax card, also known as a «fiche de retenue d'impôt», is a document issued by the tax authorities that serves as proof of an individual's tax status in the country. When an employer pays their employees' wages, they are required to withhold income tax at the source.
This means that the employer is responsible for deducting and dispatching the appropriate income tax on the employee’s behalf. To facilitate this process, employers use tax cards of their employees, which contain information about tax classes and indicate the applicable withholdings rate.
Without a tax card, the employer will withhold income tax at the highest tax rate — class 1. The typical tax rate for the case cannot be lower than 33% which may result in you paying more taxes than necessary.
This is why having a tax card is essential to ensure that the appropriate amount of income tax is withheld so there is no over- or under-taxation. Therefore you will need to obtain your tax card as soon as you arrive in Luxembourg and begin to work here.
Types of tax cards
There are different types of tax cards. Until April 30th, 2021, the Luxembourg Inland Revenue (ACD) issued tax cards that were only valid for one tax year. However, starting in May of 2021, the ACD introduced electronic multi-year tax cards, which are valid for several years, unless the card owner needs to make some changes to the information on the card. We will cover these situations further.
These multi-year tax cards retain their value until there is a change in the tax class, deductions, or other relevant information. If there are no changes, taxpayers who have received a multi-year tax card will not need a new card at the beginning of subsequent years.
The only exception is made for fixed-term employees (CDD) as they will still receive tax cards that are valid only for the duration of their employment contract.
If you want to learn more about the Luxembourg tax system, you can check our series of articles about this subject. We already covered tax residency, the type of taxes in Luxembourg, the tax classes, and much more:
Who needs a tax card
In the Grand Duchy, all employees working for a resident employer and subject to taxation must obtain a tax card. However, there are some exceptions and the following categories do not need a tax card:
- Individuals who receive a salary or pension that is not taxable in Luxembourg according to domestic law or international agreements;
- Pupils and students hired for occasional work during school holidays, whose net hourly pay after tax and social contributions does not exceed 16 euros;
- Private household employees hired for housekeeping or childcare, or to provide support and care to dependent individuals;
- Temporary agency workers (interim workers), whose salaries are subject to a flat tax on income of 10%, except for those with a gross hourly wage over 25 euros.
How to obtain a tax card in Luxembourg: step-by-step guide
Depending on whether you are a resident of Luxembourg or an expat (non-resident) and whether this is your first or subsequent application for a tax card, the administrative procedure that applies to you will differ. In this section, you will be able to see the possible scenarios and guide on how to obtain the tax card for yourself.
How to obtain a tax card in Luxembourg as a non-resident
To get a tax card as a non-resident employee, for example, when you start work in Luxembourg for the first time, you must request a non-resident tax card at the RTS Non-Residents office.
To do so, you need to provide the documents:
- The Form 164 NR fully filled out with personal information like your name, address, date of birth, and nationality along with your income and employment status;
- A residence certificate (a copy of the electricity or gas bill will work as proof of residency);
- Documents supporting your civil status — depending on the situation, you should bring a marriage certificate, a copy of the separation order, or a copy of the divorce papers, depending on the state of your partnership (any other equivalent document will work too).
That should be enough, but you always might be asked to provide additional documents. Once you have all the documents you should send them by post to the RTS Non-Residents office and normally you will receive your tax card in 30 days.
Address: 21 rue Eugène Ruppert, 2453 Luxembourg, B.P. 1706 L-1017 Luxembourg
How to obtain a tax card in Luxembourg as a resident
To obtain a tax card as a resident and current employee in Luxembourg, you do not need to make a request or take any action. The competent RTS tax office (depending on your current commune of residence) should issue the card automatically within 30 working days of your affiliation to the Luxembourg social security administration by your employer.
If you have a multi-annual withholding tax card, you will not receive a new card at the beginning of the following year unless you submit any changes to your status or personal data. Changes in civil status or address will trigger the automatic establishment of a new tax card for resident taxpayers without requiring their intervention or request.
Where the tax card is delivered
The tax cards are normally sent to the holders by post, using the address of registration. It is not possible to collect the tax cards directly at the RTS tax offices!
However, you can use the eDelivery feature to receive the document in electronic format in your private eSpace on MyGuichet.lu. To benefit from this service, you will need to subscribe to the eDelivery feature for official documents to be sent to your private eSpace. You can do it by clicking «My data» in the «Taxation» section of the page, and then «Subscription to ACD documents».
Tax cards for special cases
There are specific rules, that apply to the cases of joint taxation for married couples and people, who officially work multiple jobs in the Grand Duchy.
- Married people
If you are married and both you and your spouse receive taxable income in Luxembourg, the spouse with the highest and most stable income will receive a main tax card (1st tax card) with the tax class 2 indicated on it, while the other spouse will receive an additional tax card (2nd tax card) also with the tax class 2 indicated and a fixed tax withholding rate.
- People with multiple jobs
In case you have multiple jobs in Luxembourg, you need to obtain a tax card for each employer from the relevant administration (either the RTS tax office for residents or the RTS tax office for non-residents). The Luxembourg Inland Revenue will provide you with a main tax card and as many secondary cards as you need according to the number of jobs you have.
The main tax card should be given to the employer who pays the highest wage and most stable income. Any additional tax cards must be given to the other employers who are paying the additional salaries. The withholding of tax will be calculated based on the main tax card, and the additional tax cards will consider the income from the other job(s).
Both in the case of spouses who have opted for joint taxation and in the case of individuals with several jobs, the withholding rate for the main tax card is calculated based on the highest salary. And all other tax cards are considered «secondary» tax cards and apply a fixed tax withholding rate of 33% for tax class 1,21 % for tax class 1a, and 15% for tax class 2.
Because of this system, many taxpayers may end up owing taxes at the end of the year, as the taxes withheld throughout the year may not be enough to cover the amount.
How to register a tax deduction on the tax card
Adding a tax deduction to your Luxembourg tax card can be beneficial as it can reduce the amount of taxes that are withheld from your salary or pension income. Additionally, it can help ensure that you do not overpay taxes throughout the year and will potentially receive a tax refund when you file your tax return.
To register certain tax deductions on your tax card, you can make a request to the relevant tax office using the same form 164 R. There are numerous deductions, that can be mentioned on your tax card, according to what is available for you:
- Additional professional expenses;
- Single-parent tax credit;
- Debtor interest – only concerning consumer loans counted as special expenses;
- Divorce-related arrears on payments and permanent expenses;
- Payments into a home savings scheme;
- Certain extraordinary expenses: illness, dependant parents, disability, domestic staff expenses, childcare expenses, etc.
- Insurance contributions and premiums;
- Flat rate travel expenses;
- The deduction of the increased allowance for business expenses of disabled employees.
Remember that the registration of a tax deduction on the tax card is only valid for the year for which it is requested. Requests must be renewed each year to verify if the required conditions are met.
How to modify the information on a tax card
If you receive your Luxembourg tax card and notice any errors in the information provided, you should immediately request a correction from the competent authority that issued the tax card using
- form 164 R for residents,
- form 164 NR for non-residents.
It is strictly prohibited for both the employee and employer to make any changes to the information on the tax card themselves, keep this in mind.
If there are any significant changes to your civil status, family situation, or employer change, that affect your tax class, the tax card will be automatically updated by the RTS office for residents or by request to the RTS Non-Residents office for non-residents.
If you get married or become a parent during the fiscal year, you may be eligible for a change in tax class and can request a tax deduction for the child. These changes take effect from the date of marriage or treatment of the individualization request or the birth of the child. The updated tax card will be made available to your employer or pension fund, and the tax withheld will be adjusted accordingly.
Frequently Asked Questions (FAQ)
What is a Luxembourg tax card, and who needs one
A Luxembourg tax card, also known as a «fiche de retenue d'impôt», is a document that serves as proof of an individual's tax status in the country and provides information about the tax status of an individual. It is required for all individuals who are working in Luxembourg, whether as residents or non-residents.
The tax card is used by employers and pension funds to calculate the amount of tax to withhold from an employee's salary or pension payments. It contains important information such as the taxpayer's tax class and personal and family situation.
How is the amount of tax withheld from my paycheck determined
The amount of tax withheld from your paycheck in Luxembourg is determined based on several factors, including your income level, marital status, and the number of dependents. These factors determine your tax class, which in turn determines your tax rate.
Your employer uses this information to calculate the amount of tax to withhold from each paycheck. The tax withheld is then remitted to the tax authorities on your behalf. It's important to note that the amount of tax withheld from your paycheck is an estimate and may not be the final amount of tax owed. You may be required to pay additional tax or may receive a tax refund when you file your annual tax return.
What do you need to do to get a tax card
To obtain a tax card as a resident employee in Luxembourg, you do not need to make a request or take any action. The competent RTS tax office should issue the card automatically within 30 working days of your affiliation to the Luxembourg social security administration by your employer.
If you are a non-resident employee starting work in Luxembourg for the first time, you must request a non-resident Luxembourg tax card at the RTS Non-Residents office. To do so, you need to provide Form 164 NR with information about your name, address, date of birth, and nationality along with your income and employment status, a residence certificate, and documents supporting your civil status.
Can I make changes to my tax card after it has been issued
If you need to make changes to your Luxembourg tax card after it has been issued, you should contact the relevant administration that issued it (the RTS tax office of your commune for residents or the RTS tax office for non-residents). It's important to note that both the employee and employer are strictly forbidden from making any changes to the tax card themselves.
However, some changes to your tax card can be made automatically, such as changes to your marital status or the birth of a child. For other changes, such as corrections to personal information, you will need to request a modification using form 164 R for residents or form 164 NR for non-residents. Keep in mind that any changes made to your tax card are only valid for the current tax year and will need to be updated each year.
What should I do with my tax card, if my circumstances change during the year
If your circumstances change during the year, such as a change in civil status, family situation, or employer change, the data on your tax card will need to be updated. For resident employees, the RTS tax office will automatically make changes to your tax card based on the updated information.
However, non-resident employees will need to request the RTS tax office to update their tax cards with the new information. Keep in mind that any changes made to your tax card will affect the amount of tax withheld from your salary, so it's important to ensure that your tax card is always up to date.
