Withholding tax on salaries

This page was last modified on 02-10-2017

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.

The tax rate indicated on the tax card given to the employer each year by the employee is used to calculate the amount of withholding tax at source.

The employer must meet certain deadlines for declaring and paying the withholding tax on salaries to the Luxembourg Inland Revenue (Administration des contributions directes).

Forms / Online services

Carry out your procedure:

  • With an online service

    • Déclaration de la retenue d'impôt sur rémunérations et des crédits d'impôt bonifiés
  • By downloading a form

Preliminary steps

The declaration and payment of withholding tax on salaries implies that:

  • there is a working relationship between the employer and his employee (relationship of dependence) ;
  • the employee has handed his tax card to his employer.
    If this is not the case, the employer is required to apply the maximum tax rate which may not 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:

Frequency of declaration and payment

Total 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.

For example:

An employer has deducted the following taxes 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 stated on the declaration within the assigned deadline to the competent tax office, and indicate the business's tax identification number, the period covered by the withholding tax declaration as well as the reference number of the declaration completed 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.

Who to contact