Individual - Significant developments

Last reviewed - 05 February 2021

New tax measures for 2018

On 14 December 2017, the Luxembourg Parliament approved a law making changes to the Luxembourg corporate and personal tax systems applicable as of 2018. This law has added more flexibility to the new tax regime for non-resident individual taxpayers applicable as of 1 January 2018.

COVID-19 specific measures

Luxembourg has concluded specific agreements with its neighbouring countries (Germany, France, and Belgium). These agreements implement a mutual 'force majeure tolerance' for cross-border employees (i.e. employees working in one country and living in another one) in relation to COVID-19 restrictions.

In practice, the home-working days due to the COVID-19 pandemic are considered as being exercised in the state where the cross-border worker would have worked in a normal situation. This measure is intended to avoid a split taxation due to COVID-19 restrictions for cross-border employees.

Similar measures have been taken from a social security perspective. In practice, the days related to home working due to COVID-19 are currently exceptionally disregarded in the counting of the 25% limit for individuals qualifying as multi-state workers under Article 13 of Regulation (EC) 883/2004.

The aforementioned measures are exceptional and temporary. Initially, these rules have been set until 30 June 2020. The tax agreements concluded between Luxembourg/France and Luxembourg/Belgium have been extended until 31 August 2020. The temporary agreement between Luxembourg/Germany applies until the countries agree to put an end to such agreement.