On 10 October 2019, France and Luxembourg signed an amending
protocol ("Amending Protocol") to the
Luxembourg-France Double Tax Treaty
("DTT") which entered into force
recently on 19 August 2019.
For more information on the DTT, please refer to our
April 2018,
December 2018 and
February 2019 Newsletters.
The Amending Protocol put an end to uncertainties about the
method used in France to mitigate double taxation with respect to
Luxembourg-sourced income derived by French resident cross-border
workers.
Prior to the Amending Protocol entering into force, France was
to grant a tax credit for the French tax paid on the
Luxembourg-sourced income equal to the amount of tax already
incurred in Luxembourg. As a result of this so-called "credit
method", French resident cross-border workers, in addition to
the Luxembourg tax, were at risk of bearing the portion of the
French tax exceeding the amount of Luxembourg tax due.
