2015 has been a relatively quiet year in Luxembourg for personal taxation, partly because of significant changes expected in 2017.
In January 2015, a 0.5% tax became due for professional income, replacement income and patrimony income, with an abatement equal to the social minimum wage. Also, joint declarations for same-sex marriages became effecive.
The Belgium-Luxembourg tax treaty changed during the year, largely affecting cross-border workers living in Belgium, whereas their workdays now need to be tracked to ensure the threshold of 24 days of working outside Luxembourg (including training) are not exceeded; if it is, they will be taxed in Belgium. In Germany, the threshold is 19 days. Part-days are included as whole days for this purpose.
In October, proposals were put forward that will take effect from 2016. For individuals coming to Luxembourg and owning more than 10% of a company's shares, they will be subject to Luxembourg tax. Also, part-year residents will be taxed separately for the resident / non-resident period.
Also, tax offices will in the future send out tax assessment documents rather than just lodging amounts (returns) to one's bank account. They will also be more closely determining cross-border workers regarding taxation.
Returning to what people can do now reagrding personal taxation; firstly, there are only a few weeks (to 31 December 2015) to file 2014 tax returns. For 2015, she urged people to establish if they have maximised the opportunity for tax deductions for 2015 as there are only a few weeks left to do something about it. Such examples include an employer's pension contribution of €1,200. What can be deducted include mortgage interest (€750 - €1,500), debt interest (€336), insurances (€672), personal pension contributions (€1,500 - €3,200), home savings loan scheme (€672), charitable donations (€120+), childcare/housekeeper/cleaner (€300/month), alimonies (€24,000 / €3,400/child).
On the issue of declaring foreign income, residents do have to declare this, as they are taxed on world-wide income; non-residents do not.
Laura Foulds was speaking on Friday lunchtime at the British Chamber of Commerce in Luxembourg's luncheon at the Double Tree by Hilton in Luxembourg-Dommeldange. She also illustrated that, in Luxembourg, employees are in the middle of the EU comparison on percentage of average gross salaries retained by employees. On a similar comparison, Luxembourg is 7th least expensive in terms of the average total employer cost to provide €1 in nett pay, with Belgium and France the two most expensive.
Robert Deed, BCC board member, welcomed everyone to the British Chamber Annual Personal Tax Lunch which he explained that has been a traditional fixture in the BCC's calendar of events; he also explained the chamber's tax committee has become very active and will be organising another event next March.
Photo by Geoff Thompson (L-R): Laura Foulds, Analie Tax & Comsulting; Robert Deed, BCC
