Buying a home as a cross-border commuter: taxes and financing

Article L-0065 · 24.09.2026 · 7 min. reading time · Joé Christian Ewrard

Where is a cross-border commuter’s income taxed?

Anyone who lives in Germany and works as an employee in Luxemburg is subject to aspects of two tax systems. The employer’s registered office alone is not decisive. The determining factors are tax residence, the actual place of work and the double taxation agreement between Germany and Luxemburg.

In the usual case, income from employment carried out in Luxemburg is taxed there. The Luxembourgish employer withholds the applicable income tax. Germany generally exempts this employment income from German income tax. The double taxation agreement is intended to prevent the same income from being taxed in full in both countries.

However, this does not mean that employment income from Luxemburg is irrelevant to the German tax return. Under the rules governing the progression clause, tax-exempt foreign income may affect the tax rate applied to other income taxable in Germany. This applies, for example, to a partner’s employment income, rental income or other taxable income. The legal basis is set out in [Section 32b of the German Income Tax Act](https://www.gesetze-im-internet.de/estg/__32b.html).

Different rules may apply to self-employed individuals, managing directors, public-sector employees or people with multiple employers. Severance payments, pensions and benefits in kind must also be considered separately. A binding assessment should therefore be made by a tax adviser experienced in German-Luxembourgish tax law.

What changes when working from home on the German side?

For cross-border commuters, it is not only important where the employer is based. The place where the work is actually performed also matters. A working day spent in a home office in Bitburg, Trier or a municipality in the Trier-Saarburg district is not considered a working day in Luxemburg for tax purposes.

Since 2024, the German-Luxembourgish double taxation agreement has included a de minimis rule covering 34 working days per calendar year. If an employee resident in Germany stays within this limit, Luxemburg may generally continue to tax the employment income in full. Working days in other countries may also be relevant. The details are explained in the [consultation agreement issued by the German Federal Ministry of Finance](https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Luxemburg/2024-01-15-Luxemburg-Abkommen-DBA-Verstaendigungsvereinbarung-Anwendung-Auslegung-DBA.pdf?__blob=publicationFile&v=1).

If the limit is exceeded, taxation of the entire annual salary does not automatically transfer to Germany. Employment income is usually apportioned according to the actual working days. The portion attributable to working days in Germany may then become taxable in Germany. This results in additional documentation requirements and may lead to advance tax payments or an additional tax payment.

In practice, the risk often does not arise from regular working from home alone. Business trips, training courses, mobile working while travelling or work in a third country can make documentation more complicated. It is therefore advisable to keep an accurate calendar of working days, recording the place of work, travel days, annual leave and sick leave. It helps the tax adviser and gives the financing bank a clear and verifiable picture.

Does buying a home change your tax residence?

Buying a house in Germany does not automatically change how a Luxembourg salary is taxed. However, it can be an important indication of where a person’s centre of vital interests lies. Anyone who occupies the house themselves and lives there permanently with their family will generally have a tax residence in Germany.

The property itself gives rise to separate tax matters. These include, in particular, real estate transfer tax on purchase and property tax thereafter. If the property is let, further questions arise regarding income, deductible expenses and depreciation. These matters must be considered separately from the taxation of employment income.

A loan for an owner-occupied house does not automatically reduce income tax. Whether financing costs can be taken into account in Luxembourg depends, among other things, on the tax treatment as a non-resident, possible tax treatment as equivalent to a resident and the individual income situation. The Luxembourg authorities explain [tax treatment as equivalent to residents](https://guichet.public.lu/de/citoyens/fiscalite/declaration-impot-decompte/capitaux-mobiliers/declaration-revenus-resident/assimilation-resident.html).

Before purchasing, it should therefore be established which tax filing obligations apply in both countries. An estate agent can coordinate the documents and schedule. The legal and tax assessment is carried out by a notary, tax adviser or, in the case of special arrangements, a lawyer.

How do banks assess income from Luxemburg?

A German bank may generally include Luxembourg income in its household budget calculation. However, it must assess whether the loan is likely to remain affordable in the long term. In doing so, it considers income, expenses, existing liabilities, own funds, employment security and the property serving as collateral.

Cross-border commuter status does not automatically result in less favourable terms. However, it requires additional checks. The bank must understand how gross salary, Luxembourg deductions, potential German tax payments and variable remuneration components affect the income actually available.

One important advantage in the border region is the common currency. If the salary and loan are denominated in euros, there is no conventional exchange-rate risk between income and loan repayments. Nevertheless, a bank may assess foreign income more cautiously if documents are incomplete, the probationary period is ongoing or a large proportion of the income consists of bonuses, commission or overtime.

Banks may decide for themselves which loan applications they accept. Place of residence, place of work and the location of the property may influence their assessment. However, rejection solely on the grounds of nationality would not be permitted. The European Union explains these principles in its [information on mortgages](https://europa.eu/youreurope/citizens/consumers/financial-products-and-services/mortgages/index_de.htm).

What documents does the bank require?

For a reliable financing assessment, the bank first needs a clear picture of the income. This usually includes the employment contract, recent payslips, evidence that the payments have actually been received and any available tax documents from Germany and Luxembourg. If the probationary period is ongoing, the employment contract is fixed-term or remuneration is variable, additional evidence is often required.

The expenditure side is equally important. Existing loans, leases, maintenance payments, insurance premiums and other regular commitments must be included in full in the household budget calculation. Anyone who does not take into account potential additional German tax payments due to working from home may assess their ability to meet monthly payments too optimistically.

For the property, the bank requires information including the purchase price, land register, plot, living area, year of construction, condition and potential encumbrances. For an older house, documents relating to renovations, energy efficiency or planned modernisation may be crucial. Banks do not finance only a purchase contract. They also assess the property intended to secure the loan.

In practice, an assessment often fails not because of the Luxembourg income, but because of inconsistencies. A different net amount in the bank account, unexplained special payments or missing information about working from home will raise questions. A brief written explanation of the employment and tax situation can make the application easier to understand.

German or Luxembourgish bank: Which makes more sense?

A German bank is generally well acquainted with land charges, regional property valuation and German notarial procedures. By contrast, a Luxembourg bank is often more familiar with the employment contracts, payslips and employment models used there. No general ranking can be derived from this.

For a property in Germany, a Luxembourg bank must also determine how to establish and enforce its security. Some institutions regularly finance cross-border cases, while others do so only under certain conditions or not at all. This is a business decision made by the bank concerned and does not reflect the applicant's personal creditworthiness.

You should therefore compare more than just the borrowing rate. The monthly instalment, the duration of the fixed-interest period, repayment options, conditions for making the funds available, additional costs and how subsequent changes are handled are also important. These include parental leave, part-time work, a change of employer, more time working from home or a temporary decline in income.

A financing offer should only be compared with another once the underlying assumptions and scope of services are the same. An apparently more favourable offer may be based on a different repayment rate, a higher equity contribution or different additional conditions.

Which mistakes put financing at risk?

The most common mistake is committing to a purchase too early. Anyone who has become emotionally invested in a house will want to secure it quickly. However, a non-binding consultation or a preliminary financing confirmation is no substitute for a full credit assessment.

It is also problematic to calculate solely on the basis of the current amount credited to the bank account. The bank considers what proportion of the income is sustainably available. At the same time, buyers should make their own provision for maintenance, commuting costs, insurance and unexpected expenses. An instalment that is affordable only in a month without any unforeseen issues offers little security.

Another mistake is combining incidental purchase costs with modernisation costs. For an older house, the purchase, immediately necessary work and future wishes must be considered separately. Otherwise, there may be no money left after the transfer of ownership for measures that cannot wait.

Finally, no one should present their working-from-home situation in an overly favourable light. If the tax is subsequently allocated differently from what was assumed in the financing application, the available income may fall. A cautious, documented calculation provides better protection than the highest possible loan amount.

What is unique about the Luxemburg region?

In the Eifelkreis Bitburg-Prüm, in Trier and Trier-Saarburg and along the Luxembourg border, income from Luxembourg is part of everyday life. Nevertheless, not every lending institution assesses these cases in the same way. Experience with cross-border commuters may therefore be more important than mere proximity to the nearest branch.

Commuting is also part of the overall assessment. A house in the Vulkaneifel may involve different commuting requirements than a property near the border. Travel costs, working hours, remote working arrangements and family organisation all affect whether the financing remains compatible with your lifestyle in the long term.

A typical case is a couple where one person works in Luxemburg and the other in Germany. This brings two different tax and salary systems together in a single household budget. Another case is an employee in Luxemburg who regularly works from home in Germany. Here, the bank needs not only proof of income, but also a reliable assessment of net income after the tax allocation.

In such cases, PRIOCASA can organise the property details, the purchase process and coordination with financing partners. The tax assessment remains the responsibility of a qualified tax adviser. This clear division of responsibilities prevents an assumption made during the viewing from later resulting in a financing shortfall.

Before searching for a property, compile your proof of salary, tax and equity, and obtain professional advice on remote working and any potential German tax liability. PRIOCASA can then work with you to determine which purchase price range and which property in the Eifel, around Trier or near the border with Luxemburg fit your actual household budget.

Frequently Asked Questions

Do I have to pay tax on my salary from Luxemburg again in Germany?

In the usual cross-border commuter scenario, income earned in Luxemburg is taxed there and exempt from tax in Germany. However, it may affect the tax rate applied to other German income. Remote working, business travel or special forms of employment may result in the income being allocated between the two countries.

Will a German bank recognise my income from Luxemburg in full?

Each bank decides this as part of its credit assessment. A fixed basic salary is often assessed differently from bonuses, commission or overtime. Complete documentation and a clear tax assessment make it easier to review the application, but do not guarantee approval.

What happens if I work from home for more than 34 days?

The portion of salary attributable to days worked outside Luxemburg may then become taxable in Germany. As a rule, the entire salary does not retroactively become subject to German taxation. Have the specific allocation reviewed by a specialist tax adviser.

Can I deduct my mortgage from tax in Luxemburg?

The loan repayment is not generally tax-deductible. Whether individual financing costs can be taken into account depends on the property's use, your tax status and your personal circumstances. You should consult a tax adviser experienced in both Luxemburg and German taxation before signing the agreement.

Should I look for a house first or arrange financing first?

First establish a realistic financing range and clarify how your cross-border income will be treated. The bank's final assessment will then require the documents for the specific property. This will help you avoid making a purchase decision that only works under overly optimistic assumptions.

Topics: Cross-border commuters in Luxemburg, buying a house, property financing, double taxation, remote working, Eifel, Trier, mortgage financing

Responsible for this post: Joé Christian Ewrard — Owner & Broker IHK, PRIOCASA Immobilien & Financial services. Last updated: 24.09.2026. The draft was prepared with the support of artificial intelligence and reviewed and approved before publication (AI Transparency). This post does not replace legal or tax advice; for individual questions, please contact a notary, lawyer, or tax advisor.

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