The LCGB trade union has requested clarification on the matter of the new Franco-Luxembourg tax treaty.
This spring, many non-resident married taxpayers are required to make their first joint declaration for income tax in Luxembourg. Whilst all married cross-border employees must familiarise themselves with new administrative procedures, the LCGB has emphasised that French cross-border workers face additional uncertainty about the impact of the new Franco-Luxembourg tax treaty on their tax burden.
On 20 March 2018, Luxembourg and France signed a new tax treaty aimed at avoiding double taxation and preventing tax evasion with respect to taxes on income and wealth. The various assertions of tax experts in the media have since raised many concerns among French border workers working in or receiving a pension from Luxembourg. They fear an increase in their tax burden with the entry into force of this new convention.
In keeping with its position in recent years aimed at strict tax fairness between resident and non-resident taxpayers, the LCGB has conducted its own analysis of the agreement. As such, whilst Article 22 provides that any salary already taxable in Luxembourg is also taxable in France, the tax credit equivalent to the amount of French tax due for the same taxable salary in France is deducted. According to the LCGB, this should thus make it possible to avoid an increase in the tax burden in France.
In order to avoid any interpretation as to the scope of this provision, the trade union has requested a quick clarification of the practical application for French cross-border workers exercising a taxable professional activity in or receiving a pension from Luxembourg. To this end, the LCGB today sent a request for an emergency meeting with Minister of Finance Pierre Gramegna.
During this meeting, the LCGB also intends to address certain questions relating to tax return forms for the year 2018. For example, the law now imposes strict compliance with the deadline of 31 March 2019 for change requests of the tax system (collective or individual taxation) for the fiscal year 2018. Compliance with this deadline is impossible for all taxpayers, who will not have all the supporting documents to be attached to the tax return in time. As a result, the people concerned will not be able to opt in full knowledge of the tax system that is more favourable to them. This is particularly the case for Belgian cross-border workers, who will not receive their supporting documents for the tax declaration until May-June 2019.
The LCGB is also organising several information evenings on the declaration for the Luxembourg income tax for the year 2018 specifically dedicated to cross-border employees in France and Belgium.
