Double taxation of commuters to luxembourg

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Taxation of commuters to Luxembourg

The rules governing the taxation of commuters to Luxembourg have changed.

On the 14th June 2011 the German Federal Ministry of Finance published the mutual agreement of 26th May 2011 between Germany and the Grand Duchy of Luxembourg regarding the taxation of commuters to Luxembourg.

The mutual agreement came into force on 27 May 2011 and it applies to all cases which were not finally assessed at that time.

The statement of the German Federal Ministry of Finance dated 12th April 2011 was cancelled.

Commentary

This agreement ends a long period of uncertainty for German residents working in Luxembourg.  However it raises questions in connection with Luxembourg wage taxes and it would be helpful if the Luxembourg tax authorities published guidance on this point.

Resources

Statement of the German Federal Ministry of Finance dated 14th June 2011 – IV B 3 – S 1301 – LUX/10/10003
Statement of the German Federal Ministry of Finance dated 12th April 2011 (BStBl 2011, p. 486)
§ 165 par. 1 sentence 2 no. 1 AO (German Tax Code)

For further information or to discuss any of the issues raised, please contact Joachim Menz on +49 89 2422 300.