Working in Luxembourg, living in Germany

The DE-LU convention

The Doppelbesteuerungsabkommen (DBA) between Germany and Luxembourg dates from the 1950s and has been re-signed and amended multiple times, most recently with a Zusatzabkommen in 2024 addressing teleworking days. The principle is the standard OECD model: employment income is taxed where the work is physically performed. For a German resident working in Luxembourg, the salary is taxed in Luxembourg via the standard retenue à la source; Germany, as the country of residence, applies the Freistellung mit Progressionsvorbehalt — exemption-with-progression — to the LU-source income.

Exemption-with-progression in the German context works the same way as the Belgian version: the LU salary is exempt from German income tax, but it is taken into account in the rate calculation that applies to any other German-taxable income the household has. In a household where the LU salary is the only employment income, the practical German tax bill is zero on it; in a household with significant other German income, the LU income pushes the marginal rate on that other income upwards.

The DE-LU convention has historically been the strictest of the three on remote-day tolerance, with a long-standing 19-day threshold that practitioners considered tight. The 2024 Zusatzabkommen raised the figure, in line with the parallel renegotiations Luxembourg conducted with France and Belgium [verify current text].

Remote-day threshold (historically strict)

The principle is the same as the FR and BE conventions: a day worked physically in Germany counts as a day outside Luxembourg. Below the threshold, the full salary remains taxable only in Luxembourg. Above it, the share of salary corresponding to days worked in Germany becomes taxable in Germany under normal German income-tax rules.

What counts as a day:

• Any working day with physical presence in Germany, even a partial day, counts as a day outside Luxembourg.
• Leave, public holidays and sickness do not count — they neither protect nor consume the threshold.
• Business trips to a third country are not days in Germany.
• Working from a German train, station or airport on a journey counts if work is actually performed there.

The threshold is annual; changing employer does not reset it. The stricter historical threshold meant that even a half-day of work-from-home per week was enough to breach it over the course of the year — which is why the 2024 amendment was politically and practically important.

Social security (883/2004 + framework agreement on telework)

Social security follows EU regulation 883/2004: affiliation is in the work state (Luxembourg, via the CCSS) if less than 25% of activity is performed in the residence state. Germany is a signatory to the multilateral framework agreement on telework [verify current status], which raises the ceiling to up to 49.99% on an opt-in basis. Above the threshold, affiliation shifts to Germany — the LU employer would need to register with the Deutsche Rentenversicherung and the relevant Krankenkasse, with material payroll-cost implications.

Again, the tax and social-security thresholds are independent. A German teleworker can be well over the convention's day-count yet still under the social-security ceiling, with the consequence that the German Finanzamt taxes a share of the salary while social insurance continues with the CCSS in Luxembourg.

The Kirchensteuer question

This is the trap most German cross-border workers learn about only when their first Einkommensteuerbescheid arrives. Kirchensteuer is the church tax levied on members of recognised religious bodies (typically the Catholic and Protestant churches) in Germany; it is computed as a percentage of income tax (around 8–9% depending on Bundesland) and is not the same thing as the German solidarity surcharge.

The Luxembourg payroll does not withhold Kirchensteuer. The LU employer has no visibility into your German church-membership status and no reason to deduct it. But the German Finanzamt does have visibility — at registration, the German Meldebehörde records your Konfession, and the Finanzamt uses it. Under exemption-with-progression, the German income-tax assessment computes a rate that includes the LU salary; that rate produces a notional income-tax figure on any actual German-taxable income; Kirchensteuer is then calculated as a percentage of that notional figure.

The practical effect depends on whether you have other German-taxable income. If you have none (the LU salary is the only employment income), the Kirchensteuer base is small — but it is not necessarily zero, because the progression effect creates a notional German tax even on small amounts of other income (interest, capital gains, rental income). If you do have German-taxable income, the Kirchensteuer can be a material annual line item.

Three practical paths: leave your church-membership status as it is and pay Kirchensteuer as assessed; formally deregister via Kirchenaustritt (a procedure with social and family implications that goes well beyond tax); or address the issue with a tax advisor before the first Einkommensteuerbescheid arrives so the file is set up correctly from the outset.

Trains and travel time

German commuters into Luxembourg use a smaller number of corridors than the French side, but the routes are dense:

• Trier–Luxembourg — the main artery. Regional and IC services run frequently at peak, with travel time around 45 minutes via the Wasserbillig border crossing. Trier itself is the principal residence base for the German commute.
• Saarbrücken–Luxembourg — via the regional network, longer (around 90 minutes) but with a meaningful commuter population from Saarland.
• The Saar–Rhein corridor and IC services from Mainz and Koblenz for the long-distance occasional commute or weekly office days.
• By car: the A48/A1 from Trier to Wasserbillig and onward, the A8/A4 from Saarbrücken via Schengen, the A1/A6 from the Eifel. P+R lots at Wasserbillig and Mertert serve cross-border car-then-train commuters.

Cross-border tickets require DB/CFL combined tariffs; the LU side is free at point of use since March 2020, but the German leg is not. The DB monthly subscription products and the dedicated frontalier offers cover the routine commute.

Filing in Germany (Anlage N-AUS)

German residents file the annual Einkommensteuererklärung via Elster (or paper). The Luxembourg salary is declared on Anlage N-AUS, the schedule for foreign employment income. The form asks for:

• Country of source (Luxembourg) and the bilateral convention reference.
• Gross salary as reported on the LU certificat de rémunération (the year-end summary issued by the LU employer).
• Days worked in Luxembourg vs in Germany or third countries — this drives the split if the threshold is exceeded.
• Foreign tax withheld, informational only since the convention applies exemption-with-progression rather than credit.

If a dispute arises with the German Finanzamt about how the convention applies (for instance, whether a particular day was in Luxembourg or in Germany, or whether a posting to a third country breaks the work-state principle), the formal route is the Verständigungsverfahren (mutual agreement procedure) between the two tax administrations. In practice, most disputes resolve at the local Finanzamt level before reaching this stage.

The German Finanzamt does not learn about your LU income in real time — there is automatic information exchange between tax administrations, but it lags by months or longer. Proactive declaration prevents the awkward letter that arrives several years later asking you to explain why your LU salary was never reported.

Family allowances and Kindergeld

Family benefits follow EU 883/2004 coordination. Luxembourg is the country of primary competence when one parent works in Luxembourg, regardless of residence. The CAE pays the LU family allowance.

Germany's parallel benefit is Kindergeld, processed by the Familienkasse of the Bundesagentur für Arbeit. Under coordination, the Familienkasse pays the differential — the difference between the German Kindergeld amount and the LU family allowance — if the German amount would have been higher. For most household configurations the differential is zero (the LU benefit is typically higher), but the file still has to be opened with the Familienkasse. The FBeKG (Familienleistungsausgleich-Bekämpfungsgesetz) clarifies the procedure and the coordination logic.

Edge cases

• German Beamte on assignment in Luxembourg: civil servants of the German state are taxed in Germany regardless of where they perform the work, under the public-service article of the DBA. The general cross-border framework on private-sector employment income does not apply to them. Specific posting rules govern social security.
• Pensioners moving from Germany to Luxembourg: different framework. German source pensions remain taxable under the DBA rules specific to pensions, which differ from the employment-income rules. Moving residence to LU triggers a re-assessment in both countries — see the LU tax pillar for the resident-of-LU treatment.
• Self-employed Germans contracting with an LU client: the convention rules on employment income do not apply. A German self-employed contractor is taxed in Germany on their profits; social security is in Germany via the relevant Berufsgenossenschaft and Krankenkasse. See the freelance and indépendant guide for the LU side.
• Move to Luxembourg mid-year: the German declaration covers the pre-move period; LU declaration covers the post-move. The day-count threshold applies only to the cross-border period; from commune registration you are a full LU resident.

How to register as a cross-border worker from Germany

1. Sign the Luxembourg contract with the remote-work clause documented in writing — the number of days teleworked from Germany drives both the convention day-count and the social-security percentage.
2. CCSS affiliation via the employer. The LU employer declares the hire and you receive your matricule and CNS welcome pack.
3. Request the S1 from the CNS for coordination with your German Krankenkasse (AOK, Barmer, Techniker, etc.). You keep using the Krankenkasse for in-Germany care, with reimbursement coordinated.
4. Open the cross-border file with your local Finanzamt and address the Kirchensteuer question proactively. The annual Einkommensteuererklärung is mandatory; the LU salary goes on Anlage N-AUS.
5. Open the Familienkasse file for Kindergeld coordination, even if the differential is zero. LU pays primary via the CAE.

A worked example, in qualitative terms

Consider a German resident in Trier, working a Luxembourg CDI at salary level N, with a written agreement to telework one day per week from Germany. By December, days worked in Germany total around 45 — above whatever the current Zusatzabkommen threshold has fixed [verify] but still under the 49.99% social-security ceiling. The tax consequence: the share of salary corresponding to days in Germany (roughly one-fifth of working days) is taxable in Germany at normal Einkommensteuer rates plus solidarity surcharge and, if the worker is a registered church member, Kirchensteuer on the resulting income-tax base. The LU payroll continues to withhold tax at source on the LU-day share. The annual Einkommensteuererklärung uses Anlage N-AUS for the treaty-exempt portion and Anlage N for the over-threshold portion. Social security continues with the CCSS. The practical effect is meaningfully higher than the equivalent French situation, because German rates plus Kirchensteuer plus the progression effect can stack to a material annual figure on the over-threshold portion.

If you live in Germany and work in Luxembourg

Topic	Where it lands
Income tax on LU salary	Luxembourg, withheld at source
Social security	Luxembourg (CCSS) if DE-based work < 25% / < 49.99% under telework framework
Family benefits (one parent in LU)	LU CAE primary; German Familienkasse pays Kindergeld differential
Remote-work threshold for full LU taxation	Per 2024 Zusatzabkommen [verify]
Kirchensteuer applicability	Yes if registered church member; assessed by Finanzamt on progression base
German filing obligation	Mandatory Einkommensteuererklärung; LU salary on Anlage N-AUS

What this means in practice

Three concrete steps for a German resident starting a Luxembourg job:

1. Address Kirchensteuer before the first assessment year. Either confirm with your tax advisor that the post-progression Kirchensteuer base is acceptable, or proceed with Kirchenaustritt understanding the full implications. Surprises here are expensive.
2. Open the Finanzamt cross-border file proactively. Even if the year-one balance is zero, the file should exist. Late declarations attract a separate penalty regime independent of any underlying tax due.
3. Track days from week one. The DE-LU threshold has historically been the tightest of the three; even after the 2024 amendment, casual remote work approaches it faster than the FR or BE side. A simple log is sufficient evidence in case of audit.

Frequently asked questions