On Thursday 4 April 2024, Luxembourg's Ministry of Finance acknowledged that it had recently relayed "incomplete and inaccurate" information regarding taxation on overtime carried out by German cross-border workers in the Grand Duchy.
For context, Luxembourg and Germany signed a new double taxation treaty in December 2023. This agreement came into force on 1 January 2024 and, among other things, implies a tax increase for German cross-border workers working overtime in the Grand Duchy.
The ministry had assured last week that most of these cross-border workers would not pay more taxes since they could claim a reduction of up to €12,834 as compensation for overtime.
However, the ministry later clarified that the information provided had come from Germany's Ministry of Finance and later proved to be "incomplete and inaccurate".
During a clarification meeting held on Thursday, representatives of the German finance ministry confirmed that the basic allowance provided for by German tax law cannot be deducted from the amount of overtime.
Luxembourg's Ministry of Finance added that it would remain "in close communication" with its German counterpart regarding the application of the double taxation treaty in this context.
The clarification came after the ALEBA union had rejected the ministry's initial claims in a press release issued on Wednesday 3 April 2024.
