Border towns want Luxembourg to share taxes workers pay
Luxembourg should share income taxes collected from cross-border workers who commute from France and Germany, a group representing local officials and others in those countries said.
Cross-border workers pay taxes on their income in Luxembourg, but use public services such as daycare centers, schools and roads at their place of residence in Germany and France, according the group "Au-delà des frontières" (Beyond Borders).
"The introduction of adequate and permanent compensation for income tax revenue losses is essential in the long term. Without this, the weakening of our local public services due to a lack of budgetary room for action is inevitable," the group said in an open letter released on Wednesday.
Luxembourg's government should pay France and Germany tax compensation similar to an existing agreement in place between Luxembourg and Belgium, said the letter's signers, which included the mayors of Trier in Germany and four French towns.
Belgium's different tax relationship dates back more than a century to when it and Luxembourg formed an economic union that included sharing alcohol taxes.
The Grand Duchy also is sending millions to France so that workers can commute to jobs in Luxembourg more easily, the Finance Ministry noted on Thursday. That includes €110 million committed in 2018 to improving the flow of train traffic between Metz and Luxembourg, €10 million promised the same year to promote carpooling on the motorway between the cities, and another €110 million promised in 2021 for rail operations, the ministry said in pointing to the previously announced agreements.
More than 50,000 German and 115,000 French border workers commute daily to Luxembourg, where they are able to earn higher salaries.
Based on an existing agreement between France and Switzerland, France could collect between €192 mn and €247 mn annually while Germany could see between €100 mn and €128 mn, the group said.
France proposed a bill in 2019 that could have taxed commuters if the money due under French rules exceeded the amount taxed in Luxembourg. The plan was scrapped later the same year.
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