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Monday, 21 October 2019

Signature of an amendment to the new treaty between France and Luxembourg

Maxime Grosjean

Emma Fontenaud

As announced in our previous article, on 2 July 2019, the Luxembourg parliament approved the new double tax treaty signed between France and Luxembourg (the “New Treaty”). The New Treaty entered into force on 19 August 2019 and shall therefore be applicable as from 1 January 2020.

According to the first iteration of the New Treaty, for income derived by a resident of France which may be taxed in Luxembourg, the French tax shall be computed by allowing a tax credit equal to the amount of tax paid in Luxembourg on such income (without exceeding the French tax attributable to such income).

Commuters, residing in France and working in Luxembourg, are currently exempt from French tax under the currently applicable treaty (progressive exemption method).

To the contrary, under the New Treaty, as worded in its first iteration, their employment income would have been taxable in France with the Luxembourg income tax creditable against the French income tax.

By applying this tax credit method, it was hence possible that the taxpayers concerned could have had to pay additional taxes in France in respect of such income.

However, on 10 October 2019, France and Luxembourg signed an amending protocol in order to modify Article 22 of the New Treaty (Elimination of double taxation).

Following this change, for French residents earning income from paid employment carried out in Luxembourg, the double taxation should be eliminated by granting them a tax credit deductible from the French tax and equal to the amount of French tax attributable to such income (provided it is effectively taxed in Luxembourg).

Credit method remains applicable but the approach adopted has the same effect as the elimination of double taxation by the method of the progressive exemption.

This protocol should also be applicable as from 1 January 2020.


Tiberghien Luxembourg remains committed to monitor the implementation of the New Treaty.

For any questions, please contact your trusted advisor at Tiberghien Luxembourg or contact any of the authors of this publication.


Maxime Grosjean - Senior Associate (

Emma Fontenaud - Associate (

Maxime Grosjean

Emma Fontenaud

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