Luxembourg pensions, stock options and incentive plans
Luxembourg pension, stock options or incentive plan received by a French resident: which State taxes, when, and what to declare.
Contents
The situation
A former cross-border worker, now retired in France, receiving a Luxembourg pension and unsure where to declare it. An executive exercising options granted in Luxembourg after becoming resident in France. A beneficiary of free shares under a Luxembourg plan whose regime has since been changed.
These three files share one feature: the gap between grant and receipt, a period during which residence has often changed.
What the rules say
| Income | What governs the treatment |
|---|---|
| Pension | the category of pension and the treaty article covering it, with the matching elimination method |
| Stock options | the taxable event retained by each State, and where the work was carried out during the vesting period |
| Free shares and incentive plans | the regime applicable to the plan as in force when it was set up |
| Change of residence between grant and exercise | an apportionment of the gain between the two States, by reference to the corresponding periods of work |
The Luxembourg regime for incentive plans has been amended in recent years: two plans set up on two different dates are therefore not treated in the same way.
What the firm does with those rules
The first task is documentary: obtain the plan, its dates, its vesting conditions, and reconstruct the chronology of residences. Without that chronology no apportionment can be defended.
The second is to characterise the income, category by category, before turning to the treaty. A public-sector pension, a private scheme pension and an annuity from a savings plan do not fall under the same article.
The third is the filing, for the year of receipt and for earlier years where income was omitted. An omission on foreign income opens an extended assessment period.
Frequently asked questions
Is my Luxembourg pension taxable in France?
It depends on its category and on the treaty article that applies. The French return is due in any event, if only to apply the elimination method.
I exercised my options after moving to France: who taxes the gain?
The gain is in principle apportioned according to the periods of work carried out in each State between grant and vesting. That is a computation, not an obvious answer.
Does my plan fall under the old Luxembourg regime?
It depends on when it was set up and on its terms. The plan document is the first item to produce.
What if I have declared nothing for several years?
A voluntary regularisation, before any audit. See regularising foreign assets.
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.