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Overtime in Luxembourg: where and how to declare it as a cross-border worker
Your overtime is tax-free in Luxembourg. Must you declare it in France, Germany or Belgium, and where? The cross-border worker's guide, country by country.
You work overtime in Luxembourg. Good news: here, it's tax-free, from the basic hourly pay right through to the premium.
Possible nasty surprise: your country of residence may see things differently. Living on one side of the border and working on the other means keeping two taxmen happy.
So do you have to declare those hours back home? And where? It depends on the country. Let's untangle it for France, Germany and Belgium.
First, the Luxembourg side: tax-free, full stop
In Luxembourg, overtime pay is completely tax-free: the normal hourly rate as well as the supplement (the famous 40% premium).
These amounts appear on your Luxembourg salary certificate, among the exempt sums. On the Luxembourg side, the matter is settled.
The catch is that you don't live in Luxembourg.
Why your country of residence gets involved
As a cross-border worker, you're a tax resident of your own country. And a tax resident has, in principle, to declare all their income, including pay earned in Luxembourg.
Declaring doesn't mean paying twice. To avoid double taxation, Luxembourg has signed a treaty with each of these countries. But the method changes from one to the next, and with overtime, the detail is everything.
Live in France?
Yes, you have to declare your Luxembourg income in France, even if it's taxed 100% in Luxembourg. Overtime is added to your Luxembourg salary and declared with it (the amount net of social contributions).
Where to report it, in principle:
- on form 2047 (the "pink" form for foreign income), section 1: your name, the country (Luxembourg), the type of income and the amount;
- then carried over to form 2042, in box 1AF or 1BF depending on who earned it;
- with the total reported in box 8TK, which opens the right to the tax credit.
Since 2024 income, France applies a tax credit equal to the French tax on your Luxembourg income. In plain terms: you don't pay twice. France works out a notional tax, then wipes out the part corresponding to Luxembourg.
The French exemption doesn't apply
In France, overtime can be tax-exempt up to €7,500 a year. But that exemption only applies to hours worked under French labour law. Your Luxembourg hours, governed by a Luxembourg contract, don't qualify: they stay in your declared income.
A knock-on effect to know about: this income counts towards your tax rate. If your spouse has French income, their rate can creep up a little.
Live in Germany?
This is where it stings. Since a January 2024 agreement between Luxembourg and Germany, applied retroactively from 1 January 2024, Germany taxes overtime worked in Luxembourg.
The logic: since Luxembourg doesn't tax it, Germany takes back the right to do so. The direct consequence: even a single overtime hour paid during the year can require you to file a return in Germany.
Where to report it: in your German tax return (Anlage N and Anlage N-AUS for foreign employment income). The rest of your Luxembourg salary stays exempt there, but is used to set your rate (the Progressionsvorbehalt mechanism).
The CIHS softens the blow
To offset this taxation, Luxembourg created the overtime tax credit (CIHS), worth up to €700 a year. This is exactly the situation it was designed for. We cover it all in our article on the CIHS.
The subject is still in flux: it's contested by the unions and could change. If you're affected, take stock with a German tax adviser.
Live in Belgium?
Belgium applies exemption with progression. Translation: your Luxembourg income, overtime included, isn't taxed in Belgium, but it does have to be declared, because it influences the rate applied to any Belgian income you have.
Where to report it, in two places on the Belgian return:
- cadre IV, rubrique A (ordinary remuneration), code 1250 or 2250;
- cadre IV, rubrique O (income of foreign origin).
The amount to declare generally matches your gross pay, less social contributions and tax withheld at source.
In short
| Country of residence | Taxed where you live? | Where to declare it |
|---|---|---|
| France | No double taxation thanks to the tax credit, but declaration compulsory | Form 2047, then 2042 (boxes 1AF/1BF and 8TK) |
| Germany | Yes, taxed since 2024; the CIHS offsets up to €700 | German return (Anlage N and Anlage N-AUS) |
| Belgium | Not taxed, but counted towards your rate | Belgian return (cadre IV: rubrique A code 1250/2250 and rubrique O) |
The reflex to keep: your hours are tax-free in Luxembourg, but your country of residence has a say. Declare them properly, and you'll dodge the nasty surprises.
The rules change, so check
Forms, boxes and treaties shift from one year to the next. Before you submit your return in your country of residence, check the current details with your tax authority or an adviser.
And where does taxx.lu fit in?
taxx.lu handles your Luxembourg return (forms 100 and 163) and helps you claim the CIHS if you're entitled to it.
