Tax implications in the event of marriage

This page was last modified on 01-01-2015

This page is currently being updated.

Generally speaking, marriage gives rise to a reduction in a couple's overall tax burden when one of the spouses has little or no income.

The tax implications of marriage differ according to whether the spouses are residents or non-residents. Resident taxpayers and, under certain circumstances, non-resident taxpayers who get married in the course of the year are subject to the following tax benefits in particular:

Taxpayers who live together without being married or being registered as civil partners are taxed individually.

Who is concerned

All married taxpayers, regardless of whether they are residents or non-residents.

How to proceed

Implications of marriage for resident taxpayers

Married taxpayers, regardless of the matrimonial regime chosen by the couple, are eligible for taxation in tax class 2 and are taxed jointly.

In tax class 2, tax is calculated using the "splitting" method:

  • the spouses' income is aggregated;
  • this aggregate income is 'split' in 2 halves;
  • the base rate is applied to each half of the aggregate income;
  • the 2 tax liabilities are then added together.

Taxpayers who are taxed jointly are jointly and severally liable for the payment of tax.

Implications with respect to tax cards (employees or pensioners)

Taxpayers who get married during the course of the year and who are both employees in Luxembourg (or who both receive a taxable pension in Luxembourg) will be issued with 2 new tax cards (carte d’impôt). These cards will be issued automatically by the relevant RTS tax office, based on the data forwarded by the communal administration. No action is required on the part of the taxpayers.

Taxpayers who get married during the course of the year and where one spouse is an employee in Luxembourg and the other receives a taxable pension in Luxembourg, will also receive 2 new tax cards. These cards will be issued automatically by the relevant RTS tax office, based on the data forwarded by the communal administration. No action is required on the part of the taxpayers.

Married employees (or pensioners) will receive 2 tax cards:

  • one main card for the spouse receiving the higher and more stable income, with an entry mentioning that spouse's listing in tax class 2;
  • an additional card for the other spouse, mentioning that it is the second card, and with an entry mentioning that that spouse is listed for a fixed withholding tax rate of 15 %.

Once the cards have been received by the employer, the employees' new status can be taken into consideration for the calculation of the withholding tax on wages (or pensions) with effect from the date of the marriage.

If tax is deducted at source, only one of the spouses is taxed in tax class 2. The tax withholding for the other spouse is calculated by applying the fixed rate of 15 %. This may result in the spouses having to pay a significant amount in additional tax upon receipt of their tax assessment.

If only one of the spouses is an employee in Luxembourg (or is receiving a pension from Luxembourg), that employee or pensioner will automatically receive a new tax card and will be eligible, under certain circumstances, to be taxed in tax class 2 with effect from the date of the marriage.

Implications with respect to the income tax return

Married taxpayers are taxable jointly and must file a joint tax return.

When the marriage takes place during the course of the year, the married taxpayers must file one joint tax return and report their combined income for the entire year. In doing so, their income will be taxed based on tax class 2 criteria for the entire year, effective retroactively as of 1st January.

In filing their joint tax return, married taxpayers are eligible for the following tax benefits in particular:

The extra-professional allowance applies to spouses:

Even those spouses who get married during the course of the year will be eligible for the EUR 4,500 extra-professional allowance and for full tax relief.

The extra-professional allowance is granted automatically by the Luxembourg Inland Revenue. Consequently, the spouses do not need to apply for the allowance in their tax return.

On the other hand, where one of the spouses has been retired for fewer than 3 years, and the other spouse receives earned income, the extra-professional allowance can be claimed by ticking box P2 on page 8 of the tax return form.

Implications with respect to the annual-adjustment procedure

Where the married taxpayers are not in a position to file an income tax return, they can, under certain circumstances, file a request for an adjustment of their withholding tax by way of the annual adjustment procedure.

Married taxpayers are taxable jointly and must file one joint annual adjustment application.

Where the marriage takes place during the course of the year, the spouses must file one annual adjustment application and report their combined income for the entire year. In doing so, their income will be taxed based on tax class 2 criteria for the entire year, effective retroactively as of 1st January.

In filing their annual adjustment application, married taxpayers are eligible for the following tax benefits in particular:

Implications of marriage for non-resident taxpayers

The tax class listed on the tax card of a non-resident employed spouse will be as follows:

In tax class 2, tax is calculated using the "splitting" method:

  • both spouses' incomes are aggregated (if they both receive earned income in Luxembourg, otherwise, only income taxable in Luxembourg is taken into consideration);
  • this aggregate income is 'split' in 2 halves;
  • the base rate is applied to each half of the aggregate income;
  • the 2 tax liabilities are then added together.

Taxpayers who are taxed jointly are jointly and severally liable for the payment of tax.

Implications with respect to tax cards (employees or pensioners)

Taxpayers who get married during the course of the year and who are both employees in Luxembourg (or who both receive a taxable pension in Luxembourg) must have their tax card (carte d’impôt) amended.

Taxpayers who get married during the course of the year and where one spouse is an employee in Luxembourg and the other receives a taxable pension in Luxembourg, must also have their tax cards amended.

In all the aforementioned cases, the spouses must submit a duly completed form 164 NR to the Luxembourg non-residents' RTS tax office, with a copy of their marriage certificate. They will then receive amended tax cards.

Married employees (or pensioners) will receive 2 tax cards:

  • one main card for the spouse receiving the higher and more stable income, with an entry mentioning that spouse's listing in tax class 2;
  • an additional card for the other spouse, mentioning that it is the second card, and with an entry mentioning that that spouse is listed for a fixed withholding tax rate of 15 %.

As soon as these formalities have been completed, the new circumstances can be taken into consideration for the calculation of the withholding tax on wages (or pensions) with effect from the date of the marriage.

If tax is deducted at source, only one of the spouses is taxed in tax class 2. The tax withholding for the other spouse is calculated by applying the fixed rate of 15 %. This may result in the spouses having to pay a significant amount in additional tax upon receipt of their tax assessment.

If only one of the spouses is an employee in Luxembourg (or receives a taxable pension in Luxembourg), that employee must have their tax card amended by the competent authority (see above) in order to be listed in tax class 2 (or 1A where applicable) with effect from the date of marriage.

Implications with respect to the income tax return

When each of the spouses receives earned income in Luxembourg—profit from a business enterprise, agricultural or forestry-related profits, earnings from self-employment or income from paid employment—they are jointly liable for taxation and, generally speaking, must file a joint tax return.

When the marriage took place during the course of the year, spouses who both receive earned income liable for taxation in Luxembourg must file one joint tax return and must report their combined income earned in Luxembourg for the entire year. In doing so, their income will be taxed based on tax class 2 criteria for the entire year, effective retroactively as of 1st January.

Extra-professional tax allowance

In filing their tax return, these married taxpayers will receive the extra-professional allowance of EUR 4,500 per year. Where the tax liability does not cover the whole year, the allowance is reduced to EUR 375 per full month of tax liability.

The extra-professional allowance applies to spouses:

Even those spouses who get married during the course of the year will be eligible for the EUR 4,500 extra-professional allowance and for full tax relief.

The extra-professional allowance is granted automatically by the Luxembourg Inland Revenue. Consequently, the spouses do not need to apply for the allowance in their tax return.

On the other hand, where one of the spouses has been retired for fewer than 3 years, and the other spouse receives earned income, the extra-professional allowance can be claimed by ticking box P2 on page 8 of the tax return form.

If only one of the spouses receives earned income that is taxable in Luxembourg, under certain circumstances, that spouse must file an income tax return reporting only their income from Luxembourg sources.

Treatment of non-resident taxpayers as resident taxpayers

Under certain circumstances, non-resident taxpayers may opt to be treated as resident taxpayers for tax purposes, and may then claim the full tax relief that is generally reserved for residents. Married taxpayers who opt for this tax regime are taxed jointly and must file a joint tax return. They must report all of the household's income earned in Luxembourg or abroad.

In filing a tax return, married taxpayers who opt for this tax regime are eligible for the following tax benefits in particular:

Implications with respect to the annual-adjustment procedure

Where the married taxpayers are not in a position to file an income tax return, they may, under certain circumstances, file a request for an adjustment of their withholding tax by way of the annual adjustment procedure.

Married taxpayers are subject to joint taxation and must file one joint annual adjustment application if both spouses receive a salary (or pension) liable for taxation in Luxembourg.

Where the marriage takes place during the course of the year, the spouses must file one annual adjustment application and report their combined taxable income in Luxembourg for the entire year. In doing so, their income will be taxed based on tax class 2 criteria for the entire year, effective retroactively as of 1st January.

In filing an annual adjustment, married taxpayers are eligible, where applicable, for the extra-professional allowance of EUR 4,500 per year (see above). Where the tax liability does not cover the whole year, the allowance is reduced to EUR 375 per full month of tax liability.

If only one spouse is an employee (or a pensioner) in Luxembourg, that employee/pensioner must file an individual annual adjustment application.