Working in Luxembourg, living in Germany: how your salary is taxed
Luxembourg taxes your salary through the wage tax your employer deducts. Non-residents are in tax class 1 by default, even when married; class 1a applies to single parents, widowed people and people aged 64 or over. A married couple can ask for assimilation when at least 90 % of the worker’s income is taxable in Luxembourg or the income from elsewhere stays below 13,000 €; the calculator uses the collective rate (class 2) only if it is cheaper. Luxembourg social security applies to the whole salary; health cover is through the CNS.
Up to 34 days a year worked in Germany or in a third country are tolerated, not reduced for part-time work; a day counts once you have worked at least 30 minutes there. Above 34 days, Germany taxes the pay for all those days from the first day and Luxembourg taxes only the rest.
Germany exempts the Luxembourg salary but uses it to set the tax rate on your other income (Progressionsvorbehalt, § 32b EStG). This matters most for married couples taxed jointly when the spouse earns German income: the spouse’s tax rises. For the days taxed in Germany the calculator deducts home-office days at 6 € each, while commuting costs (0.38 € per km) reduce the exempt income used for the rate; the solidarity surcharge and, for church members, church tax at the rate of your Land are added.