Withholding tax on salaries
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The income tax due by the employee is deducted from the salary by the employer who is responsible for paying it to the Luxembourg Inland Revenue (Administration des contributions directes).
The employer must meet certain deadlines for declaring and paying the withholding tax on salaries to the Luxembourg Inland Revenue.
Who is concerned?
In principle, each employer is required to apply withholding tax on salaries for each of their employees.
Prerequisites
Preliminary steps
Reporting and paying withholding tax on salaries presupposes that an employment relationship exists between the employer and the employee (relationship of dependence).
Since 1 January 2022, employees are no longer required to submit their tax card to their employer. They must, however, continue to ensure that a card is issued for their job.
In the absence of a valid tax card, the employer is required to apply the highest tax rate to the employee's remuneration, i.e. on the basis of tax class 1 and where the rate cannot be lower than 33 %.
How to proceed
When to declare and pay withholding tax
Every employer is required to declare and pay the tax which he has deducted from the salaries paid to employees.
The frequency for declaring and paying withholding tax depends on the total amount of withholding tax that the employer has transferred during the month in progress:
Sum of the deductions for the month |
Frequency of declaration and payment |
Declaration and payment to be carried out for the … |
|---|---|---|
From EUR 750 |
monthly |
10th of the following month |
From EUR 75 to EUR 750 |
quarterly |
10th of the month following the quarter |
Less than EUR 75 |
annually |
10th of the month following the tax year |
The withholding tax on salaries must be declared and paid within 10 days of the end of the declaration period.
Example:
An employer has deducted the following tax from employee salaries in March:
Amount of tax deducted:
- Employee 1: EUR 80.65
- Employee 2: EUR 105.20
- Employee 3: EUR 65.20
In total, the employer has deducted EUR 251.05 in income tax. As this amount is between EUR 75 and EUR 750, the employer must declare and pay the withholding tax on salaries on a quarterly basis. Thus, the employer must declare and pay the tax withheld for the months of January, February and March on the 10th of the month following the quarter, i.e. on 10 April at the latest (January to March quarter).
Procedure for the declaration and payment of withholding tax
In order to declare and pay withholding tax on salaries, the employer must:
- submit a declaration of withholding tax on salaries via MyGuichet.lu or via form 950 in a timely manner;
- pay the amount indicated on the declaration within the prescribed time limit to the competent tax office, and communicate the following information:
- the company's tax number, the period concerned by the tax withholding;
- the reference number of the declaration submitted via MyGuichet.lu.
Example:
Mr X, employer, usually pays more than EUR 750 per month in withholding tax. Each month, he submits the withholding tax declaration and caries out the payment separately. The withholding tax for January is declared on 1 February and paid on 9 February.
Even if no withholding tax was deducted during a specific period of time, the employer must make a declaration stating, in this case, that no tax was deducted.
The employer who pays salaries that are not subject to withholding tax may, on request, be exempt from the obligation of making periodic withholding tax declarations. The request must be sent to the competent RTS office (Retenue d'impôt sur les Traitements et les Salaires - withholding tax on wages and salaries) which is determined by the geographical location of the registered office of the business.
Any failure or delay to declare or pay the withholding tax may result in penalties.
Online services and forms
Who to contact
Luxembourg Inland Revenue (ACD)
-
Luxembourg Inland Revenue (ACD)
- Address:
- 33, rue de Gasperich L-5826 Hesperange Luxembourg
Please consult the above website to find the competent department.
Related procedures and links
Procedures
Links
Further information
-
Déclaration de la retenue d’impôt et des crédits d’impôt et le versement de la retenue par les employeurs et les caisses de pension
sur le site de l'Administration des contributions directes (ACD)
-
Versement de la retenue d'impôt sur les salaires et les pensions
sur le site de l'Administration des contributions directes (ACD)
-
Compétences et adresses
sur le site de l'Administration des contributions directes (ACD)
Legal references
concernant l'impôt sur le revenu
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