Services
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Not only since the Luxembourg tax reform 2018, the fiscal situation for cross-border employees in the region Germany — Luxembourg has become more and more complex. Frequent changes in the tax law of both countries and divergent legal views of the German and Luxembourg tax authorities make it increasingly difficult and time-consuming for cross-border employees to fully comply with their tax obligations in both countries and to benefit at the same time from the tax options, allowances and deductions available. In addition, cross-border workers often face complex social security issues.
As Luxembourgish Experts-Comptables and German Certified Tax Advisors, we have many years of professional experience in these areas and support both cross-border employees and their employers in the border region Germany — Luxembourg with a broad range of services.
Preparation of income tax returns / requests for annual income tax equalisation
We prepare both your Luxembourg and your German income tax returns and calculate which tax refund or additional tax payment is to be expected. In this context, we also check whether you are obliged to submit an income tax return or whether the submission of a voluntary tax return is advantageous for you. If you are not obliged or entitled to submit a Luxembourg income tax return, we check whether a request for an annual income tax equalisation (“décompte annuel”) is advantageous and file, when appropriate, the respective request on your behalf.
We will, of course, take care of any correspondence with the Luxembourg or the German tax authorities that might be necessary in this regard.
We review your income tax assessments and, if necessary, file appropriate tax appeals on your behalf.
Preparation of income tax returns / requests for annual tax equalisation
We prepare both your Luxembourg and your German income tax returns and calculate which tax refund or additional tax payment is to be expected. In this context, we also check whether you are obliged to submit an income tax return or whether the submission of a voluntary tax return is advantageous for you. If are not obliged or entitled to submit a Luxembourg income tax return, we check whether a request for an annual income tax equalisation (“décompte annuel”) is advantageous and file, when appropriate, the respective request on your behalf.
We will, of course, take care of any correspondence with the Luxembourg or the German tax authorities that might be necessary in this regard.
We review your income tax assessments and, if necessary, file appropriate tax appeals on your behalf.
Luxembourg tax reform 2018
For many married cross-border employees, the 2018 tax reform has significantly increased the tax burden and has charged them with additional administrative obligations.
In many cases, the additional tax burden can at least be reduced to a certain extent. On the one hand, this can be done by accurately calculating the global tax rate which serves as basis for your monthly income tax deduction. When calculating this global tax rate, you can often benefit from additional deductions which can result in a decrease of your monthly wage tax deduction. On the other hand, the income tax return in accordance with the provisions of Art. 157ter LIR also offers in many cases the possibility of using additional allowances and deductions in order to at least partially reduce the additional tax burden. We also advise you whether it is at all favourable in your individual situation to have a global tax rate entered on your wage tax card.
Besides the additional tax burden, there are often increased administrative burdens. Due to the tax reform 2018, many more married cross-border employees than before are obliged to file an income tax return in Luxembourg. Moreover, many couples will no longer be in the position to file their income tax returns in accordance with the simplified provisions for taxpayers with limited tax liability (Art. 157bis LIR), but will have to prepare their tax returns in accordance with the much more complex provisions of Art. 157ter LIR (fictitiously unlimited tax liability). This requires, among others, that all non-Luxembourg (foreign) income must also be declared in the tax return. This involves in turn that the foreign income is to be determined in accordance with Luxembourg tax laws.
We are happy to assist you in this respect and help you to reduce your additional tax and administrative burdens.
Luxembourg tax reform 2018
For many married cross-border employees, the 2018 tax reform has significantly increased the tax burden and has charged them with additional administrative obligations.
In many cases, the additional tax burden can at least be reduced to a certain extent. On the one hand, this can be done by accurately calculating the global tax rate which serves as basis for your monthly income tax deduction. When calculating this global tax rate, you can often benefit from additional deductions which can result in a decrease of your monthly wage tax deduction. On the other hand, the income tax return in accordance with the provisions of Art. 157ter LIR also offers in many cases the possibility of using additional allowances and deductions in order to at least partially reduce the additional tax burden. We also advise you whether it is at all favourable in your individual situation to have a global tax rate entered on your wage tax card.
Besides the additional tax burden, there are often increased administrative burdens. Due to the tax reform 2018, many more married cross-border employees than before are obliged to file an income tax return in Luxembourg. Moreover, many couples will no longer be in the position to file their income tax returns in accordance with the simplified provisions for taxpayers with limited tax liability (Art. 157bis LIR), but will have to prepare their tax returns in accordance with the much more complex provisions of Art. 157ter LIR (fictitiously unlimited tax liability). This requires, among others, that all non-Luxembourg (foreign) income must also be declared in the tax return. This involves in turn that the foreign income is to be determined in accordance with Luxembourg tax laws.
We are happy to assist you in this respect and help you to reduce your additional tax and administrative burdens.
Services for employers
We advise Luxembourg employers who employ cross-border employees regarding the tax and social security obligations that may arise if German employees work outside of Luxembourg, i.e. in Germany or other countries.
Luxembourg employers are increasingly facing the situation that their German employees demand compensation when they have to submit a German income tax return and are charged with income tax in Germany on part of their Luxembourg income as a result of exceeding the so-called 19-day limit in accordance with the German-Luxembourg double tax treaty dated 26 May 2011. We support employers in this regard by preparing simulation and compensation calculations, which can be the subject of a tax protection or tax equalization agreement with the employees.
On request, we can also prepare German or Luxembourg income tax returns for your employees.
