Taxes across borders

This article comes from Delano Expat Guide 2023-24, published in July 2023.

“No tax rules specifically apply to expats, but income from several countries needs to be taken carefully into account”, says Nicole Fletcher at the advisory firm Grant Thornton.

Despite the grand duchy’s international reputation for corporate tax friendliness, that is not necessarily the case for individuals. “In Luxembourg, the taxes are quite high if we compare with other countries…particularly when you are single”, observes Jean-Philippe Franssen, partner, payroll and personal tax at Grant Thornton Luxembourg.

There is an “expatriate tax regime”, which Franssen calls “complex” to set up and involves quite a bit of preparation with the expat and employer before relocation. It also has its limits: “it’s interesting, but not too interesting” and it’s for a determinate period of only eight years”.

Aside from the expat regime, Luxembourg’s tax rules apply uniformly across nationalities. “Citizenship doesn’t play a role”, according to Nicole Fletcher, senior manager, payroll and personal tax at the same firm. The same goes for married couples with different passports: it won’t impact tax filings.

What could complicate matters is income from multiple countries, notes Fletcher.

For example, rental income from an expat’s home country could limit tax deductions here. And in general, expats shouldn’t claim deductions in their home country if they’re filing as a Luxembourg resident. Speak with a tax advisor to be sure.

To get more advice, please do not hesitate to contact our tax experts at Grant Thornton at the following email address: incometax@lu.gt.com.

With more than 330 people and 24 partners, Grant Thornton Luxembourg is a leading provider of Audit, Tax & Accounting, Advisory, Financial Services and Technology services for all types of entities in Luxembourg.