Cross-border tax: living next door, working in Luxembourg

The principle

The cross-border framework for Luxembourg starts from a single rule, articulated in the bilateral conventions Luxembourg has signed with France, Belgium and Germany and modelled on the OECD's standard tax-convention articles. The rule is: employment income is taxed in the state where the work is physically performed. Article 14 (or its equivalent in older treaties) of the OECD model is the textual anchor; each bilateral convention adopts it with country-specific amendments.

For a French, Belgian or German resident working at a Luxembourg office, the principle assigns the right to tax employment income to Luxembourg — provided the work is physically performed in Luxembourg. Days worked elsewhere — from home, from a client site abroad, from a coworking space in the home country — are days worked outside Luxembourg, and the right to tax those days belongs to the country where they happened.

If every day were worked in Luxembourg, the system would be straightforward: Luxembourg taxes the full salary, the home country exempts it (typically with progression — the income is added back to determine the marginal rate on other income but the Luxembourg salary itself is not taxed again). The complication is that teleworking from home is normal, and the convention has to fix a tolerance below which the home country agrees not to tax even the days worked in its territory. That tolerance, the "threshold", is the political and practical centre of the framework.

Tax residency itself is determined by the home country first — France, Belgium or Germany applies its own domestic concept of domicile fiscal, résidence fiscale or steuerlicher Wohnsitz. If both Luxembourg and the home country want to claim residency (rare for ordinary cross-border workers, more common for executives with property in Luxembourg), the convention's tie-breaker articles apply: permanent home, centre of vital interests, habitual abode, nationality. For the typical cross-border worker, residency is unambiguous and the only live question is the share of days.

The remote-day thresholds (FR / BE / DE)

Each of the three countries has its own day count, set by the bilateral convention or its most recent amendment (avenant). The exact figures move; the principle is stable.

France — 34 days under the 2023 avenant

The avenant to the LU-FR convention signed in 2023 raised the tolerated remote-work threshold to 34 days per calendar year [verify: 34-day figure against the consolidated convention text on Légilux and the impots.gouv.fr summary]. Below 34 days worked from France, the French tax authority does not tax the corresponding share. Above 34 days, the proportion of days worked from France is taxable in France in addition to the Luxembourg taxation of the days worked in Luxembourg.

Belgium — separate threshold

The LU-BE convention has its own threshold, distinct from the French one, and adjusted by successive amendments [verify: current Belgian threshold against the consolidated text on Justel and the SPF Finances summary]. The Belgian system is administratively the strictest — Belgian residents must declare their Luxembourg income on the IPP/PB return regardless of the threshold position, using codes 1057-2057 for foreign-source professional income.

Germany — historically stricter

The LU-DE convention has historically operated on a lower threshold than France or Belgium [verify: current German threshold against the consolidated text on Bundesfinanzministerium.de]. German residents file the Anlage N-AUS together with the standard German return, and the German tax authority adjusts the bill via the exemption-with-progression mechanism.

What counts as a "day"

Every convention applies the same broad rule: a day with any partial professional activity outside Luxembourg counts as one day, not as a fraction. A half-day of telework counts as a day. A short call from a French train counts as a day. Days of pure leisure or travel without work do not count. Sickness days and approved leave are typically treated separately, but the detail differs between the three conventions — and the burden of proof, in case of audit, is on the taxpayer.

How social security works under 883/2004

Tax and social security are governed by completely different instruments. The OECD-style bilateral conventions allocate the tax base; EU regulation 883/2004 (the "Coordination of social security systems" regulation) and its implementing regulation 987/2009 allocate the social-security affiliation.

The headline rule of 883/2004 for employed persons working in more than one Member State is the "applicable legislation" principle: a person is subject to the legislation of one Member State at a time. For a cross-border worker employed in Luxembourg, the default rule is that Luxembourg legislation applies — meaning Luxembourg's CCSS collects social-security contributions, the worker is affiliated to Luxembourg's CNS for healthcare, and pension rights accrue under Luxembourg's pension system.

The default tips into the home-country legislation when the worker performs a substantial part of the work in the country of residence — defined in 987/2009 as 25% or more of the working time or the remuneration. Once the 25% threshold is crossed, the entire affiliation shifts to the home country: salary is still paid by the Luxembourg employer, but the employer becomes liable for home-country social contributions, and the worker loses Luxembourg CNS in favour of the home-country health system.

This is administratively heavy. The Luxembourg employer needs to register with the home-country social-security authority, the worker's family allowances and pension contributions move, and (for many employers) the cost difference makes substantial home-country work commercially unworkable. For most cross-border workers, staying below the 25% threshold is the design constraint.

Telework framework agreement

The 25% rule predates large-scale telework. The pandemic-era surge in remote work made it politically untenable for the cross-border population around Luxembourg, who could easily exceed 25% from home without doing anything multi-state in a substantive sense.

The EU response was a multilateral framework agreement on cross-border telework, adopted by the Administrative Commission for the Coordination of Social Security Systems and signed by participating Member States. The agreement raises the social-security affiliation threshold to less than 50% (up to 49.99%) of working time for taxpayers and employers who request its application, provided both the residence state and the work state are signatories.

France, Belgium and Germany were among the original signatories alongside Luxembourg, the Netherlands and a number of other Member States [verify: current list of signatories on the EU's Administrative Commission page and on the Luxembourg CCSS page]. The application is not automatic: the employer must request the application of the agreement to a specific employee via the CCSS, and the request is renewable annually.

Two important caveats: the framework agreement only addresses social security — it does not change the bilateral tax conventions or the day thresholds set out above. A cross-border worker can stay affiliated to Luxembourg CNS while still triggering home-country tax on the days exceeding 34 (or the country-specific number). The two systems run on different rails.

Filing in two countries

Practically, a cross-border worker has two declarations to make every year.

Luxembourg side

The non-resident version of the income-tax declaration — form 100 F (model 100 for non-residents) — captures Luxembourg-source salary, the tax retained at source by the employer, and any deductions a non-resident is entitled to. Non-residents who meet the assimilation conditions can opt for resident-equivalent treatment and access class 2 and the resident deductions (see the tax-classes guide for the conditions).

France

French residents file the déclaration de revenus (form 2042) with the foreign-income annex form 2047. The Luxembourg salary is reported on 2047 and then transferred to 2042 with the appropriate code. France applies exemption-with-progression on the Luxembourg-taxed share and direct taxation on the days exceeding the 34-day threshold (if applicable). The French tax authority cross-checks with the data Luxembourg sends under DAC.

Belgium

Belgian residents file the déclaration à l'impôt des personnes physiques (IPP / PB). Luxembourg professional income is reported under codes 1057-2057 on the foreign-income section. Belgium applies the exemption-with-progression mechanism on the Luxembourg-taxed share — though, in practice, the Belgian system has historically been less generous than France or Germany on the effective marginal rate.

Germany

German residents file the Einkommensteuererklärung with the Anlage N-AUS for foreign salary. Germany applies the standard exemption-with-progression mechanism on the Luxembourg-taxed share, and direct taxation on any days exceeding the German threshold.

The rule of thumb across all three: always declare, even when no additional tax is due in the country of residence. Non-declaration is reframed as undeclared foreign income once the DAC data arrives — and that triggers penalties, interest and a much more uncomfortable conversation than a clean declaration would have done.

Edge cases

Business travel to a third country

Days spent travelling for the Luxembourg employer in a third country (a meeting in Switzerland, a conference in the United Kingdom) are not days worked in Luxembourg and not days worked in the country of residence. They sit in a third bucket that the bilateral conventions deal with separately — typically still taxable in Luxembourg under article 14, provided the visit is short and the salary is paid by the Luxembourg employer.

Training abroad

Days at a training course outside Luxembourg, paid for by the Luxembourg employer, are usually treated as days worked in the country where the training takes place. They count toward the home-country threshold if the training is in the country of residence, and toward the third-country bucket if elsewhere.

Sickness and parental leave

Sickness days and approved parental leave are treated specifically by each convention. The general principle is that they are not work days for either side of the threshold — but the formal treatment depends on the convention text. The German treaty, in particular, has detailed rules on continuing payments during incapacity.

Contractual remote-work setups

A "fully remote" contract for a Luxembourg employer with the worker permanently based in France, Belgium or Germany breaks the framework entirely: the work is no longer being performed in Luxembourg at all, and both the tax and social-security allocations would shift to the home country. Most large Luxembourg employers will not sign such contracts without restructuring through a home-country subsidiary or a posting arrangement.

Comparison table

Cross-border framework — France, Belgium, Germany

Country	Tolerated remote-work threshold	Home-country form	Telework framework signed	Typical home-tax interview season
France	34 days [verify against the 2023 avenant on Légilux]	Form 2042 + Form 2047	Yes [verify current signatory status]	April–June (online declaration window)
Belgium	Separate threshold under the LU-BE convention [verify on Justel]	IPP / PB declaration, codes 1057–2057	Yes [verify current signatory status]	June–October (Tax-on-web window)
Germany	Lower than FR or BE [verify against Bundesfinanzministerium.de]	Einkommensteuererklärung + Anlage N-AUS	Yes [verify current signatory status]	April–July (ELSTER window, with extension routes)

What this means in practice

1. Track your days. Keep a simple log — date, location, whether work was performed. A spreadsheet is enough. The burden of proof is on you in case of an audit, and reconstructed memory after the fact does not survive scrutiny.
2. File in both countries, every year. Luxembourg form 100 (resident or non-resident) and the home-country declaration. Use the dedicated foreign-income annex (2047 in France, codes 1057-2057 in Belgium, Anlage N-AUS in Germany) and reconcile against the Luxembourg withholding shown on your payslip and certificate of remuneration.
3. Get country-specific advice for impatriate or self-employed cases. The framework above is built for a standard salaried cross-border worker. The impatriate regime, freelance status (indépendant) and director-of-company arrangements all carry their own complications that need professional review.

FAQ

Do I have to file in my country of residence as well as Luxembourg?

Yes, in almost every case. France, Belgium and Germany all require their residents to file their worldwide income in their home declaration, even when the tax on the Luxembourg salary is paid in Luxembourg. The home declaration applies the exemption-with-progression mechanism: the Luxembourg income is exempted from local tax but is used to lift the marginal rate on other income.

What counts as a day worked outside Luxembourg?

Any day with even partial professional activity outside Luxembourg counts as a full day for the threshold calculation. A half-day of telework from home is one day. Pure travel days without work do not count. Sickness days and approved leave are treated separately under each convention.

What is the threshold for France in 2026?

The 2023 amended LU-FR convention raised the tolerated remote-work threshold to 34 days per year [verify against the consolidated text on Légilux and the impots.gouv.fr summary]. Beyond 34 days, the days worked from France become taxable in France in proportion to the workdays spent there.

Does the social-security threshold work the same way?

No — social security is governed by EU regulation 883/2004, not by the bilateral tax conventions. The default rule is that you remain affiliated to Luxembourg as long as less than 25% of your working time is in your country of residence. The EU framework agreement on telework, signed by FR, BE and DE, raises that threshold to less than 50% (up to 49.99%) for taxpayers and employers who request its application.

My employer keeps withholding tax in Luxembourg even when I telework. Is that right?

Yes, in most cases. The employer withholds in Luxembourg under the Luxembourg PAYE system. The home country adjusts the position through your home declaration — by taxing the proportion of days that exceed the threshold, or by applying exemption-with-progression on the days under the threshold.

What happens if I forget to declare in my home country?

Under DAC (Directive on Administrative Cooperation), Luxembourg automatically reports salary, tax and identifying data to the resident's home tax authority. Failure to declare is therefore reframed as undeclared foreign income, with penalties and interest. Declaration is non-negotiable even when no additional tax is due.