Is personal income tax filing mandatory? Particularly a new comer question

LuxembourgPosted on 14 December 2023 by Team@LuxExpats

Are you a newcomer to Luxembourg? Or you may have stayed for many years and never filed for tax. Wondering when to file and when you're not required to file? Here we have some quick answers.

First, the timing:

Tax filing is for one full year. 1 Jan to 31 December. You've a maximum of one year to file your taxes. i.e. 2023 taxes can be filed before 31 December 2024.

Second, is tax filing mandatory? It depends

So, let's first differentiate between two tax payers that are common in Luxembourg. Those employees of the European institutions and those that are employed in Luxembourg tax regime.

First question you need to ask yourself is, is my salary only income or do I've other income. e.g. Income from rent, stock sale, real estate sale etc.

If salary is the only income, then no tax filing required as your taxes are deducted at source. But, you may still want to file the tax if you expect to deduct somethings and ask for refund. We are leaving out the deductibles, typically an accountant can help.

So, now if salary is not the only income, and you have additional income, you need to complete the personal income tax filing.

And, your Luxembourg salary is typically adjusted to inflation, as announced by the Luxembourg ministry.

However, there is one group of employees who are exempt from Luxembourg salary and inflation adjustments. Those are the European Institution employees.

European Institution employees:

European institution employees are not subject to Luxembourg tax regime for income tax. They pay only European tax and are not subject to typical Luxembourg inflation increase etc.

However, if the European institution employees have additional income outside their salaries, then they are requiired to file taxes.

One tip, if you're making investments (stock, real estate), hold it longer than 6 months for receiving 0% capital gain tax.

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Are you looking for an accountant who can ease your filing burden? Contact ACAR accounting luxembourgexpats.lu/local-business/accounting-and-tax/1100001335

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