The 34-day tolerance is a threshold, not an allowance. The difference fits in one example: with 40 days worked outside Luxembourg in the year, it is not 6 days that become taxable in the country of residence — it is all 40. Going over makes the protection fall away for every day worked outside the territory, from the first one.
The salary is split
Once the threshold is crossed, the year's salary is divided between the two countries in proportion to the days:
- days worked in Luxembourg remain taxable in Luxembourg;
- days worked elsewhere — at home, travelling, in a third country — become taxable in the country of residence.
The country of residence, which taxes worldwide income anyway, exempts the Luxembourg share but generally keeps it to set the rate applicable to the rest (exemption with progression). The detail of the mechanism varies from treaty to treaty; the principle of splitting pro rata is common to all of them.
The employer withholds, the tax office puts it right
Luxembourg withholding tax does not adjust itself: the employer withholds Luxembourg tax on the whole amount as long as there is no reason to do otherwise. Putting it right goes through the returns:
- in Luxembourg, to pay tax only on the share of days worked there, and to recover the excess withheld;
- in the country of residence, to declare the share that falls to it.
Two tax authorities, two timetables, one single day count — the same figure has to turn up everywhere. A count that differs from one return to the other is the shortest route to a request for information.
Going over gets noticed
Tax authorities exchange information, and the country of residence knows how to ask for a day count from anyone declaring a Luxembourg salary. That is the moment the burden of proof bites: it is for the taxpayer to establish where each day was worked. An acknowledged and documented overrun is settled cleanly; an overrun that is discovered is argued years later, with interest, and on the basis of whatever evidence has survived.
If the overrun is coming
Nothing forces you to watch the threshold go by. A count kept as you go shows the trajectory from the autumn: at 30 days in October, you know there are 4 days of margin left, and you decide knowingly — postpone a trip, group your remote days, or accept the switch and prepare both returns. The worst position is the count reconstructed in January, when nothing can be decided any more.