France Stands Firm on Tax Hikes for Cross-Border Workers

Luxembourg Commuters Face Unchanged Fiscal Reality Amidst Budgetary Pressures

Thousands of cross-border commuters from France working in Luxembourg are facing continued tax increases, as France signals no intention to revise its fiscal agreement. Despite earlier efforts by officials and unions to lobby for changes, the French government appears resolute in its stance.

Fiscal Realities and Government Stance

Elected representatives and labor organizations had attempted to rally affected cross-border workers in the spring, encouraging them to send detailed accounts of their tax increases to the French Ministry of Finance, Bercy. This was an effort to compel an impact study, which has yet to materialize. A prominent elected official, privy to behind-the-scenes discussions, indicated that the issue is considered closed, with no plans for reconsideration. This claim has reportedly been gradually absorbed by the Ministry of Finance over successive administrations, much to the dismay of local officials.

“The truth is that it is mainly people who have high incomes who are affected by significant increases. The average tax increase is estimated at 300 euros per year,” says a local elected official, judging the new calculation much more just than the previous one. “The fact that such a system has continued so far was abnormality. No other country had a comparable convention,” he justifies.

—Unnamed Elected Official

Economic Pressures Dictate French Policy

The current political climate in France, focused on fiscal consolidation, leaves little room for concessions. The nation’s public finances are strained, making it difficult for the government to prioritize relief for a segment of cross-border workers, even those potentially facing substantial tax hikes. For instance, a significant portion of French cross-border workers who are married and whose spouses work in France have seen their taxable income consolidated, leading to increased tax burdens compared to previous arrangements.

French Finance Minister **Eric Lombard** reportedly showed limited awareness of the specific challenges faced by French nationals commuting to Luxembourg. The average increase, estimated at €300 annually by an elected official, is seen by some as a more equitable system than previous arrangements, as similar bilateral tax conventions are uncommon elsewhere.

La nouvelle convention fiscale entre la France et le Luxembourg continue de susciter le mécontentement chez les frontaliers. Des milliers de personnes sont concernées par des hausses d’impôts. https://t.co/2b9pGk8P1I

— L'essentiel (@lessentiel) October 15, 2023

The French government’s firm stance is further underscored by the ongoing need to manage public finances effectively. With national budgets under pressure, any potential adjustments that could reduce state revenue are unlikely to be favored, making the cross-border tax situation a persistent challenge for many.