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Income Tax Calculator
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What you need to know about taxes
Taxation in Luxembourg is a vast and rather complex field. It is worth starting with the basic principles and the types of taxes that exist.
All individuals who receive any income – be it salary, pension, royalties, income from renting an apartment, etc. – pay the income tax.
In Luxembourg the income tax is progressive, i.e. the higher the income, the higher the rate.
To determine the levy rate, first, find the total annual income after deducting all social contributions of around 12%:
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. In Luxembourg, individuals are considered tax residents if they stay in the country for more than 6 months per year and have a domicile.
Residents
Non-residents
To become a Luxembourg tax resident, an expat must meet one of the following conditions
A permanent place of residence is a property, house or apartment that one has acquired and intends to live in permanently or for an undefined, but sufficiently long, period of time.
An expat who has not acquired real estate can still be considered a tax resident if he or she has a place of residence where the individual resides regularly for a significant period of time. For example, a long-term rented house or apartment.
A person who spends more than 183 days in Luxembourg in a calendar year is considered to be a tax resident, regardless of whether he has a permanent home or habitual residence in Luxembourg.
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:
2 class remains in effect for 3 years after a divorce or the death of a spouse.
Another levy under an odd name is an obligatory supplement to income tax. It ranges from 7% to 9% of the tax paid amount:
The maximum combined income tax rate, which includes all contribution fees and the solidarity tax, may not exceed the threshold of 45.78%
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. There are 4 VAT rates in Luxembourg: 17%, 14%, 8% and 3%.
- Social contributions are paid by everyone to maintain the health insurance system.
- When selling movable and immovable property, there may be reduced tax regimes.
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 return declarations must be filled out and signed by the competent tax authority by March 31 of the following year after reporting due year. Penalties for late filing stand: 10% of the tax amount for late filing and another 0.6% penalty for each month of delay.
The declaration must be filled out in paper form and sent to the Luxembourg Tax Office (ACD) or submitted online.
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