French cross-border workers may start paying more tax: how Luxembourg's trade unions react to this

After several postponements, the Franco-Luxembourg tax convention will enter into force in 2025, and for the first time income for 2024 will be taxed under the new system.

This is the "effective rate method", which applies to taxpayers with mixed income (from France and Luxembourg). Under this method, French tax will be calculated on the basis of total income, but with a credit equal to the tax already paid in Luxembourg. However, only social contributions are deducted and not the entire tax, which may increase the overall tax burden.

In 2020, when the reform was already trying to take effect, some cross-border workers faced tax increases of hundreds or even thousands of euros. This is especially true for families where the main income comes from Luxembourg and French income is much lower. Pensioners are particularly vulnerable, as a year of service in Luxembourg is on average equivalent to 4-5 years in France in terms of pension payments.

Despite a promise by former French Economy Minister Bruno Le Maire that the changes would not affect the tax burden, no official calculations have yet been published. A study on the impact of the convention on taxpayers, commissioned by the French Finance Ministry, has not been made public.

OGBL insists on transparency and demands that the French government publish a study to confirm or deny the promised "neutrality" of the changes. French Senator Silvana Silvestri sent an official letter to the new Minister of Economy and Finance demanding that she clarify the situation and fulfil her commitments to protect cross-border workers.

Thus, it remains unclear whether French residents working in Luxembourg will have to pay higher taxes. However, trade unions warn that many families could face an unexpected increase in tax contributions as early as 2025.