Cross-border workers in Luxembourg: tax and filings
Living in France and working in Luxembourg: where the salary is taxed, the teleworking day threshold, and the French return.
Contents
The situation
You live in France and work in Luxembourg. Your employer withholds Luxembourg tax, and you assume the matter ends there. Then comes the French return, where the salary already taxed has to be entered, and a doubt sets in: am I being taxed twice.
Since teleworking became widespread, a second and costlier doubt has been added: how many days may I work from home without consequence.
What the rules say
| Item | Treatment |
|---|---|
| Salary for work carried out in Luxembourg | taxable in Luxembourg, the State where the work is done |
| French return | the salary is entered there, the treaty then removing the double taxation |
| Teleworking from France | tolerated up to the threshold of days set by the protocol to the treaty |
| Exceeding the threshold | the part of the salary corresponding to the teleworked days becomes taxable in France |
| Other income | each category follows the treaty article that covers it |
What the firm does with those rules
The first task is a count. Teleworked days, but also training days, business travel in a third country and certain standby duties are included in the calculation, which many employees and employers do not realise.
The second is the filing: entering the salary in the right box, claiming the treaty mechanism, and evidencing it with the employer’s certificate and the Luxembourg assessments.
The third is contentious, where the French authorities tax part of the salary: it turns on the count of days and on how the disputed days are characterised.
The fourth concerns the employer, who may have to adjust the withholding and put its position right on both sides of the border.
Frequently asked questions
Must a salary already taxed in Luxembourg be declared in France?
Yes. The return is compulsory, and it is what triggers the removal of double taxation. Not declaring it is an omission, not a saving.
What happens if I exceed the teleworking threshold?
The remuneration corresponding to the teleworked days becomes taxable in France, and the double filing becomes a real computation.
Is my employer concerned?
Yes, through its withholding and its social security obligations. Exceeding the threshold has effects for both parties.
What if I move my residence to Luxembourg?
The whole analysis changes, including the possible assimilation to Luxembourg residents for income tax purposes.
This article sets out a general framework and is no substitute for a review of your file: every situation has its own dates, figures and documents.