I will be moving to Luxembourg soon and just got to know about this tax regime for expatriates in Luxembourg. I think I am qualified for this regime because I will be getting a European Blue Card once I land in Luxembourg. The Blue Card, as we all know, is reserved for highly skilled workers. So my question is how can I get aboard this tax regime? Is it on the mercy of my employer to give it to me or is it my right as a highly-skilled worker to demand it? The astonishing thing is that my employer's tax advisor (PwC) never told me about this. Which makes me wonder if my employer wants me to benefit from this regime. What should I do?

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    It's your employers tax adviser, not yours. They are paid to look after the employers best interests, not yours, just keep that in mind.
    – Ron Beyer
    Sep 2 '19 at 20:06
  • So now I do know about this, do you think they would help me? I don't have the slightest idea who should I contact regarding this. If they refuse, what options do I have? Sep 2 '19 at 20:24
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    They might or might not, but it's a conflict of interest for them. They aren't going to give you advice that costs their customer more to have you, no matter how much it benefits you. The best thing to do would be to find an impartial (or partial to you) tax expert with experience in this kind of situation to advise you on your best strategy.
    – Ron Beyer
    Sep 2 '19 at 20:27

It's not obvious to me that merely being a blue card holder necessarily means you qualify as highly skilled for the purpose of this tax regime (although the criteria actually seem laxer than for the blue card). Also, the list of expenses you can declare is quite limited and very specific, it's not a straightforward discount like some other similar schemes (e.g. the Dutch 30% ruling).

But most importantly, as explained in the second paragraph,

A specific tax regime exists for the costs incurred in moving highly qualified workers and borne by the employer.

So the employer has to pay for these costs, submit these as operating expenses and send a list of employees benefiting from this regime to the tax office. In other words, it's not something you can apply or benefit from, your employer does. It also doesn't matter if you are incurring some of these costs (e.g. moving costs), the regime only applies if your employer paid for them.

The goal is to help Luxembourg-based employers be more attractive by offering e.g. tax-free relocation packages to highly qualified hires. But if you have already agreed to come without these benefits, your employer has little incentive to give you an additional benefit that was not part of the original negotiation. That's what you would need for this regime to apply.

  • Aah, so basically this tax incentive is only for employers. Which means they can write-off the perks given to employees to attract talent. I did think earlier this may be the case but the following line: "The employee may request a contribution from their employer for the following moving costs and expenses, as long as the expenses incurred do not exceed a reasonable amount:"; made things somewhat confusing. Sep 2 '19 at 23:48
  • @ChiragArora I think it's a little more complicated than that, in that my understanding is that these payments also do not count towards your personal income tax. But the first hurdle is convincing your employer to pay a relocation package covering all or some of the expenses listed. If you don't have such a package, then the tax regime is moot. If you do, let your employer deal with it, whether they save on taxes is more important to them than to you. Either way, you would not be requesting to benefit from the tax regime, that's a secondary consideration.
    – Relaxed
    Sep 3 '19 at 5:39
  • My employer is giving me a relocation lump-sum, but nothing from the 'recurring costs' such as the house rent and yearly flight tickets back to home. Sep 3 '19 at 12:29
  • I contacted PwC and this is what they said: "Please kindly note that unfortunately, you cannot decide to benefit from the expatriate regime by on your own. It is the company who decided which employees are entitled to benefit from it and communicate the list of employees to the government. In general, when you receive the offer from the employer they inform you about this option - if it is available for you, also could happen that they indicate it in the employment contract." Sep 3 '19 at 12:30
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    @ChiragArora That's more or less what is explained on the website and in my answer. If you want them to pay for flight tickets (or whatever), you need to negotiate that with them. The tax regime doesn't really matter to you, really.
    – Relaxed
    Sep 3 '19 at 13:11

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