Tax returns in Luxembourg

A tax return that reflects your situation

Your tax return must reflect all the relevant aspects of your file: income, family situation, deductible expenses and any links with other countries.

SQUARREL assists individuals with their Luxembourg tax return, from straightforward situations to files requiring specific analysis. Your file is handled directly by Hadrien Peschon, chartered accountant.

Identifying your obligations and the relevant options

Do you need to file a tax return?

Tax withheld from your salary or pension does not necessarily exempt you from filing an annual tax return. The firm reviews your obligations and takes into account any requests from the Luxembourg Inland Revenue (Administration des contributions directes).

Where filing is not compulsory, the merits of a voluntary filing and the procedure suited to your situation are considered: a tax return or, where its conditions are met, an annual adjustment (décompte annuel).

Which taxation options should be considered?

Depending on your situation, the analysis may cover joint or individual taxation, the conditions specific to partners and, for non-residents, tax assimilation.

These options are assessed taking into account the income concerned, including that of your spouse or partner where necessary, as well as the deductions available. An option is not chosen solely on the basis of the tax class shown on your tax card.

Reviewing your income and deductions

Professional income and pensions

The firm reviews salary or pension certificates and any particular features of the year: several employers, a change of activity, indemnities, additional income or self-employed activity.

Family situation and deductible expenses

Depending on your file, the review covers in particular:

• children living in your household and contributions to the maintenance or education of children living outside your household;
• interest relating to your home and financing costs that may be taken into account;
• insurance premiums, contributions, private pension scheme (prévoyance-vieillesse) and home savings plan contracts;
• donations and certain expenses, notably childcare costs, domestic help costs or medical costs that you bear yourself.

Each expense is reviewed against the applicable conditions, ceilings and supporting documents. A payment or a certificate does not, on its own, establish that the expense is deductible.

Property income in Luxembourg or abroad

Do you let a flat, a house or several properties? The firm determines the rental income to be declared under Luxembourg rules and prepares the necessary schedules, notably forms 190/210 depending on the file.

The analysis may include rents, charges, loan interest and depreciation. When the property is declared for the first time, the acquisition documents and information on its construction, works and use make it possible to review the depreciation basis and method.

Investments and foreign income

Dividends, interest, capital gains, foreign salaries or pensions: their treatment depends on their nature, your residence and, where applicable, the relevant tax treaty.

Income that is exempt in Luxembourg may nevertheless have to be declared and be taken into account in determining the tax rate. The firm reviews which items need to be included in your tax return and the supporting documents required.

How does the engagement work?

1. You submit your request

You state the year concerned, your country of residence, the main categories of income and any particular features of your situation. Please also mention any request from the tax authorities or any deadline to be met.

This first step can be taken in writing, without a prior appointment.

2. We specify the documents, the scope and the fees

You receive a list of documents tailored to your file. The services and fee arrangements are agreed before work begins.

If the documents reveal a complexity requiring additional work, this is discussed with you before it is carried out.

3. Your tax return is prepared and explained to you

The documents are reviewed and you are asked for any missing information. The tax return and, depending on the agreed engagement, an estimate of the balance of tax payable or refundable are sent to you for review.

The main treatments adopted and any points requiring attention are explained to you. The final assessment of tax remains the responsibility of the tax authorities.

4. You approve before filing

The tax return is submitted to you for approval. Where filing is entrusted to the firm, it takes place after your approval and once the necessary formalities have been completed. Otherwise, you are given the relevant documents and instructions so that you can submit it yourself.

Fees tailored to the work involved

Fees depend in particular on the type of income, the number of schedules, your family and international situation, as well as on the analysis required and the condition of the documents provided.

Preparing the tax return includes the checks needed to prepare it within the agreed scope. An in-depth tax study, several comparative simulations, the regularisation of previous years or work after receipt of the tax assessment may be the subject of a separate engagement.

Tax returns to be filed in another country are not automatically included in the preparation of your Luxembourg tax return.