Luxembourg - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.

Residency rules

Are there special residency considerations for short-term assignments?

If the individual is considered as resident in both countries, the individual remains resident in the country where he/she has his/her family and economic links (i.e. center of vital interests). There is no specific consideration for short-term assignments in Luxembourg.

Payroll considerations

Are there special payroll considerations for short-term assignments?

No. In presence of an economic employer in Luxembourg, Luxembourg workdays are taxable there from Day1.

The Luxembourg government has transposed in the Luxembourg Tax Law of a section of the EU Directive in respect of the automatic exchange of information on salaries, pensions and directors’ fees.

Therefore, Luxembourg paying entities/employers had to report prior end of February 2016 the information related to calendar year 2015 salaries to the Luxembourg tax authorities.

After 30 June 2016, the EU Member States of residence of the employees will be automatically provided information on these income (i.e. salaries, pensions and directors’ fees), and will be able to tax these income based on the applicable tax treaty provisions.

Taxable income

What income will be taxed during short-term assignments?

The taxation depends on the double taxation treaty provisions between Luxembourg and the other contracting country.

For more information, please see section Economic Employer Approach.

If there is no double taxation treaty between Luxembourg and the other contracting country, the individual would be taxable in Luxembourg on his/her salaried income as of the first day of professional activity performed (or put to use/value) in Luxembourg. Providing the short-term assignee is a non-Luxembourg resident, he/she would be taxable only on Luxembourg-sourced income.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Luxembourg?


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