The aim of this newsletter is to focus on the main changes applicable in the Luxembourg income tax and social security law as from the tax year 2015.
Temporary tax for the budget balance
Within the 2015 state budget law, the Luxembourg Government introduced a new temporary tax for the purpose of budget balancing (“impôt d’équilibrage budgétaire”).
This new temporary tax amounts to 0.5%. It applies to:
|Who is concerned?||Income||Taxable basis||Respon-sibility||Assessed by|
|Individuals (residents/non residents) subject to Luxembourg social security||Professional income (*)||For wages : Gross income less 1 x minimum monthly social salary (**)For self-employed income/commercial profits : Gross income less ¾ of minimum monthly social salary (**)||
|Social security authorities (CCSS)|
|Replacement income (*)||Gross income less ¾ of minimum monthly social salary||Caisse de pension (***)|
|Residents and non-residents||Assets-related income taxable in Luxembourg||Net taxable income||Individual||Tax authorities (Income Tax offices)|
(*) specific rules apply in case of part-time, multiple occupations, multiple pensions, concurrence of professional activity/pension.(**) minimum monthly social wage for non-qualified workers, i.e. EUR 1,921.03 (current index 775.17) to be increased to EUR 1,922.96 from 1 January 2015 (bill of law should be voted soon).(***) If the employer / caisse de pension do not withhold the tax, they become the debtor of the tax.
This temporary tax is aimed at financing improvements in childcare.
Maternity and education allowance abolished
The Luxembourg Government intends to significantly modify the Luxembourg social security code mainly in relation to the benefits/leave granted to parents raising children. Some of these changes have already been published, whereas others should be voted during the year 2015.
Among the published changes, the maternity allowance as well as the education allowance are abolished. These allowances are however still granted if they have been applied for before 1 June 2015 to the CNPF (Caisse Nationale des Prestations Familiales).
As a reminder, the maternity allowance is the allowance paid to pregnant women domiciled in Luxembourg who have no employment or self-employment activity; the education allowance is granted to any person who raises one or more children, is primarily engaged in the education of children in the family home and is not engaged in a business activity (or has limited income).
Legal interest rate
The legal interest rate has decreased from 3.25% to 3%.
Interest rate for interest subsidy
The amount of the interest rate for interest subsidy has decreased from 2% to 1.5%.
This means that as from 2015, the benefit resulting from an interest-free loan granted by the employer is fixed at 1.5% of the loan per year. If the interest rate borne by the employer is lower than 1.5%, the benefit amounts to the difference between the interest rate granted and the 1.5% rate.
Same-sex married individuals taxed jointly
The marriage of same-sex couples that was voted in 2014 came into force on 1 January 2015. As a matter of consequence, a new circular has been issued by the Luxembourg Tax Authorities to recognize the joint taxation of married couples of the same sex as from the tax year 2015.
This means that as from the tax year 2015, same-sex married couples who are tax residents in Luxembourg are taxable jointly (just like other married couples):
Same-sex married couples whose marriage is based on a foreign country's legislation are also considered as jointly taxable as from tax year 2015. Prior to tax year 2015, these couples may be taxed jointly as legal partners in Luxembourg.
Tax card for foreign tax residents
As from 2015 the tax cards should be issued automatically to the resident and non-resident taxpayers without any action required on their part.
The tax cards for both resident and non-resident taxpayers should be updated automatically by the tax authorities within a 30-day period, further to :
For resident taxpayers, the tax card will also be updated automatically further to any change of address and civil status reported by the taxpayer to a Luxembourg local authority, i.e. “population” office or "Biergercenter".
For non-resident taxpayers however, any updates of address or civil status are still to be reported by the individuals to the tax authorities (Bureau RTS non-résidents).
Travel expenses within Luxembourg amended
Due to a merge of two Luxembourg communes, a new table of units for travel expenses between home and the place of work has been published by the Luxembourg Tax Authorities.
For further information, please do not hesitate to contact us.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.