2025 Tax Declaration for Luxembourg Cross-Border Workers !

Luxembourg cross-border workers, the rules for declaring your Luxembourg income in France are changing this year! The effective rate method is officially being abolished. What should you do? What can you expect?

📅 Mark your calendar: online declaration opens on April 10, 2025.

How the tax credit works

Foreign income (here Luxembourgish) is included in the calculation of the French tax rate (for income taxable in France), and the tax authorities will reimburse you with a sum (tax credit) equal to the amount of French tax that would have been paid if this income had been French.

How does it work?

Your total income (French and foreign) will result in a French tax rate. From this French tax amount, a tax credit will be directly deducted, calculated based on your declared Luxembourg income and the French tax that would have applied to these foreign earnings if they had been French. Your final tax will therefore be reduced by this tax credit.

Declaration process – Tax credit equal to French tax

In France, the declaration is made using forms 2047, 2042 C, and 2042.

Employees? Cross-border workers should report their private-sector salaries on form 2047 (all remuneration, including benefits in kind from Luxembourg, minus social security contributions but not the Luxembourg tax paid). Do not deduct the Luxembourg tax or the 540-euro expenses related to income generation. This amount should be transferred to the main income declaration form N°2042, boxes 1AF or 1BF depending on the income holder. The amount must also be reported on line 8TK of form 2042.

Retirees? Cross-border retirees should report their pensions (minus social security contributions but not the Luxembourg tax paid). The “bonus tax credit for retirees” should NOT be deducted when filing your French declaration. This amount should be transferred to the main income declaration form N°2042, boxes 1AL or 1BL, depending on the income holder. It should also be reported on line 8TK of form 2042.

Please note, the forms will only be available in early April this year. This article will be updated as soon as they are available (the box numbers might slightly change)!

If you hold a foreign bank account, you must declare it to the French tax authorities (Form 3916). You can consult our brochure on this topic for free: Brochure link: https://www.frontaliers-grandest.eu/uploads/publications/Ouvrir_compte_bancaire_etranger_2020_web.pdf

Will I be taxed in Luxembourg and France?

When a tax treaty is in place between two countries, a person cannot be taxed twice on the same income. Therefore, a person residing in France and working in Luxembourg cannot be taxed twice on their Luxembourg salary (once in France and once in Luxembourg). Since France has implemented a worldwide income declaration, it is mandatory to declare foreign income.

Countries can choose between two methods: the tax credit method (imputation) and the effective rate method (exemption). Both methods are used to eliminate double taxation. Depending on which method is applied, the sections you need to fill out in your tax declaration will be different. Feel free to visit our website, where you will find helpful guides from the tax authorities: French Tax Declaration 2024.

Important

From an international perspective, the tax credit method is recommended and is used in most new tax treaties signed by France.

This new method ensures tax fairness between cross-border workers and non-cross-border workers. Indeed, the Luxembourg withholding tax is not the final tax amount. Cross-border workers may benefit from Luxembourg tax reductions, meaning their Luxembourg tax will be lower than what was declared to the French tax authorities. Thus, a lower income will have been declared than the actual income that should have been declared. Feel free to check out the explanatory interview with the tax authorities in our video “Mag’ des Frontaliers..”