2018 tax reform in Luxembourg: pay attention to your tax class and your residency status!

Your tax return and your tax refund may change.
Last year Luxembourg modified fiscal law bringing in many adjustments; primarily rising the ceiling applicable for certain deduction and adding new deductibles. Rules for non-resident married couples were changed as well.

But how may Luxembourg fiscal reform affect your next tax return? What are the relating implications your tax refund claim?

Tax classes in Luxembourg 

Income tax amount in Luxembourg is based on multiple factors: 
● the tax class you belong to 
● the amount and the nature of your income 
● your residency status

Your residency status is maybe the most important one and you should take it into account for your next tax return. Please, notice that non-Luxembourg income is not taxable but it will be taken into account to determine the related tax rate on Luxembourg income! 

Here is a table explaining howLuxembourg tax system classifies taxpayers and what is the tax amount applied.


Tax class





Yearly net taxable income

(married couples add their individual income)

30,000 EUR

60,000 EUR

120,000 EUR


Married Taxpayers

Same as residents if they don’t live apart and if more than 50% of their household income is in Lux

678 Eur

5,584 Eur

27,833 Eur

Widowed in the first 3 years

Same as residents

Divorced or separated in the first 3 years

Same as residents

Civil partner who elect to file jointly and live together for a full fiscal year

Same as residents if either partners income derived from Lux is 90% of the worldwide income


Widowed not in class 2

Same as residents

1,277 Eur

13,159 Eur

38,411 Eur

Who is at least 65 on 1 January

Same as residents if they have income in Lux

Single parents with child in the household

Married living together and with 50% or less of their household income in Lux


Taxpayers not included in other classes

Same as residents

2,791 Eur

13,916 Eur

39,168 Eur

Changes from the Luxembourg fiscal reform

The considerable change, as from this tax year (2018), is that residents and non-residents couples will have the possibility to continue filing a joint tax or to opt for an individual taxation. Nonetheless, the fiscal reform introduced extra deductions for the couple (joint tax return) and a special allowance for their children. They ought to be mentioned in case you decide to file a joint tax return.Based on this, you should be classified in Class 1 or Class 2, which implies different applicable tax rates. Now that you are aware of it, we advise you to try to consider the proper solution in order to avoid a more excessive taxation.

Let's make some examples!

Married couples with just one resident partner in Luxembourg
You will be regarded as in Class 1 and in this case, it would be better to file your tax return independently. The only exception for you to fall into Class 2 is that 90% of your worldwide income came from Luxembourg.Married couples, both partners non-residents
You will get in Class 2 if at least 50% of your household income is in Luxembourg. In this case, better to opt for a joint tax return!

Better think about your tax refund!

Taxpayers must focus on how to optimize their tax situation. Completing an income tax return (déclaration pour l’impôt) can be very complicated, as claiming your tax refund. Don’t hesitate to engage the services of a qualified accountant. It will cost you money but will make the whole process easier.Dendax provides you this services in the most rapid and easiest way. Contact one of our professionals in your native language and ask for a tax consultancy. In addition, we offer you a FREE calculator to evaluate your tax refund amount! Visit our website and find out how easy it is!