On 7 October 2022, Luxembourg Ministry of Finance issued a draft proposal (the “Draft Proposal”) amending the current Regulation dated 6 February 2012 (Règlement ministériel du 6 février 2012) (the “Regulation”) on the publication of remoteness units determining the deductible travel expenses for income tax purposes.
The Regulation was already amended several times over the last years (i.e. Règlement ministériel du 19 décembre 2014 modifiant le règlement ministériel du 6 février 2012 portant publication des unités d'éloignement déterminant les frais de déplacement déductibles en matière d'impôt sur le revenu and Règlement ministériel du 1er décembre 2017 modifiant le règlement ministériel modifié du 6 février 2012 portant publication des unités d’éloignement déterminant les frais de déplacement déductibles en matière d’impôt sur le revenu).
Inclusion of new specific cases in the Regulation’s scope
As a reminder, the Regulation determines how to calculate remoteness units for non-resident taxpayers working in Luxembourg to obtain the deductible amount of travel expenses for income tax purposes.
The Draft Proposal foresees the introduction of rules for the determination of deductible travel expenses in two new situations not yet covered:
- The situation of the resident taxpayer whose place of work is located in the territory of one of Luxembourg's border countries (Germany, Belgium or France); and
- The situation of resident or non-resident taxpayer whose departure place to work and place of work are not located within the territory of the Grand Duchy of Luxembourg.
The Draft Proposal also plans to extend the new provisions to taxpayers with commercial, agricultural and forestry profits or self-workers.
Precisions on the notion of remoteness
According to the Draft Proposal, the remoteness units for determining the deductible travel expenses should be calculated as follows:
- For the resident taxpayer whose place of work is located in the territory of one of Luxembourg's border countries: the remoteness is determined by taking into account, firstly, the distance between the taxpayer's place of work and the place where he is supposed to leave the Luxembourg territory. The latter distance is added to the distance between the place of residence of the taxpayer and the place where the taxpayer leaves the Luxembourg territory;
- For the resident or non-resident taxpayer whose departure and place of work are not located within the territory of the Grand Duchy of Luxembourg: the actual distance between these two places shall be taken into account. The remoteness is determined by multiplying the actual distance in kilometres between these 2 places and ninety-nine euros. For the purpose of this calculation, only the distance exceeding the first four kilometres, but not exceeding 30 kilometres, must be considered.
If the amendment is approved as it stands, the provisions will enter into force on 1 January 2023.