Overtime in Luxembourg and taxes in Germany: what the government coalition is really planning

You've been a good worker bee, even working overtime in Luxembourg - and now the rumour is doing the rounds: ‘Soon tax-free in Germany!’ No more taxes, full salary? Sounds fantastic! But unfortunately, it's not quite true.

In fact, things are a little more complicated: if you work overtime in Luxembourg, you get two things:

• The normal hourly wage (i.e. 100%);
• A supplement on top (for example 40% or 50% extra).

And now for the crucial information: the government coalition is only planning to make the supplement tax-free - not the entire overtime! This means that the regular wage for your extra work remains taxable in Germany.

Another important condition: the planned tax relief is only to apply to people in full-time employment.

Example for a full-time job:

You have a full-time job and work overtime for €50 per hour. Your employer pays you a 40% bonus, i.e. an extra €20.

➡ Previously: Both the €50 hourly wage and the €20 supplement were taxed in Germany.

➡ In future: Only the €20 supplement is tax-free - the €50 hourly wage remains taxable.

In short: the tax exemption does not apply to everything, but only to the ‘icing on the cake’ part of your overtime pay. So: cause for happiness, but with realistic expectations 😉

Example for a part-time job:

You have a part-time job and work overtime for €50 per hour. Your employer pays you a 40% supplement, i.e. an extra €20.

➡ Previously: Both the €50 hourly wage and the €20 supplement were taxed in Germany.

➡ In future: No change. Both the €50 hourly wage and the €20 supplement will be taxed in Germany.

In short: The planned tax relief is a small but significant plus for full-time employees - not a free pass for tax-free overtime overall.