Commuters benefit as Luxembourg, France amend disputed tax deal
Luxembourg and France have changed a controversial tax treaty so that French cross-border workers will not have to pay taxes in both countries, as had originally been planned.
The original treaty – passed only in July – foresaw that commuters from France would pay income tax in Luxembourg, and would also have to pay supplemental taxes in France if the rates there were higher.
For example, if €100 in taxes was due in Luxembourg but €120 in France, they would have had to pay the €20 difference to Paris.
Some 100,000 people commute into Luxembourg from France, and critics had argued that the new treaty would penalise these cross-border workers for seeking employment outside their country.
The two countries have now scrapped the double taxation of workers, reversing back to the previous system which exempts cross-border workers from paying tax in France.
The Chamber of Commerce, the Chamber of Employees and the Chamber of Civil Servants had all criticised the previous agreement, which formed part of a series of tax treaties to comply with new rules from the OECD, with countries including Belgium, Kosovo and Uzbekistan.
Local authorities in French border regions may not be pleased with the new deal. In their opinion, cross-border workers use local infrastructure without paying taxes for them.
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