Good news for commuters! France and Luxembourg have rectified the debated tax deal. French cross-border workers will not be taxed in both countries.
The disputed tax treaty been Luxembourg and France has finally been amended. The new convention will eliminate the risk of double taxation and grant commuters 29 days of teleworking a year.
The new treaty was signed on Thursday morning by Luxembourg's Minister for Finances Pierre Gramegna and his French counterpart Bruno le Maire. The imputation system will be abandoned. This system had cross-border workers increasingly worried as it would have allowed France to claim the difference between the taxes paid in Luxembourg and the ones they would need to pay in France. In other words, double-taxation has effectively been scrapped.
Instead, cross-border workers Luxembourg reverts back to the previous system of “exemption with progression.” Gramegna stressed that "cross-border workers will not be liable to pay taxes on his Luxembourgish salary in France." However, the Luxembourgish salaries of French cross-border workers may still be used to calculate the tax rate applicable in France (for income received in France). These changes will apply from 1 January 2020.
The amendment allows French cross-border workers to "remain in a situation of continuity in relation to their current [income] situation," Gramegna added. A collective sigh of relief for the 100,000 people benefitting from this amendment.