Dealing with Residents and Cross-borders in a Tax-benefit Model for Luxembourg
- Luxembourg Institute of Socio-Economic Research/LISER, Luxembourg
Cite this article
as: P. Liégeois; 2025; Dealing with Residents and Cross-borders in a Tax-benefit Model for Luxembourg; International Journal of Microsimulation; 18(2); 94-123.
doi: 10.34196/ijm.00324
Figures
Figure 1
Share of the whole population (in % of the total population in 2017), based on its employment (social-economic) status*
*Mean over all 5 imputations (see Section 2.1) – **EUROMOD/HFCS-XB is dealing only with households in which at least one member is a XB worker, that is presently active in Luxembourg, whereas EUROMOD/HFCS-R is targeting the whole Luxembourgish resident population – ***(yem + yse) > 0 over the residence household
Figure 2
[A] Share of employees, based on their earnings compared to the MSW, in % of employees with positive (>0) labor earnings [*] (MSW = 1998.59 EUR / month in 2017). [B] Share of resident self-employed and pensioners, based on their earnings compared to the MSW, in % of self-employed and pensioners with positive (>0) earnings [*] (MSW = 1998.59 EUR / month in 2017)
[A] [*] Mean over all 5 imputations (see Section 2.1), except for averages that are valid for imputation 1 only. The averages are whatever the working time (part-time and full-time workers altogether), which partially explains discrepancies with Clément et al. (2023) outcomes on pages 50 on. – [**] The “All incomes” columns involve all XB employees with positive employment income (yem > 0 and “employee”, as referred to in EUROMOD through the labor economic status variable “les” == 3); “LU-income only” is dealing with that part of XB population earning employment income from Luxembourg (yem_lu > 0), the latter group being embedded in the former one, hence a sub-group of it ♦ [B] [*] Mean over all 5 imputations (see Section 2.1), except for averages that are valid for imputation 1 only – [**] yse > 0, “self-employed/employer”, as referred to in EUROMOD through the labor economic status variable “les” == 1 or 2 – [***] il_taxpen > 0, “pensioners”, as referred to in EUROMOD through the labor economic status variable “les” == 4
Figure 3
Share of households across the types of households, as resulting from EUROMOD/HFCS-R and EUROMOD/HFCS–XB (Outcome from imputation 1 only – see Section 2.1)
Figure 4
Share of Fiscal Households across the fiscal brackets, based on their yearly tax base [*], if >0 and class-1 (single without dependents) or class-2 households (couples), resulting from EUROMOD /HFCS-R and EUROMOD /HFCS-XB Note to the reader: it should be understood from the “27%” seen for bracket [26,457-45,897] for resident couples (class-2 fiscal households) that 27% of those households are experiencing a tax base situated between 52,914 €/year (twice 26,457) and 91,794 €/year, given that this tax base is divided by 2 in Luxembourg before applying the tax schedule for computing the tax on income (finally multiplied by 2 for an effective value). [*] Mean over all 5 imputations (see Section 2.1).
Tables
Table 1
Populations covered by the EUROMOD input databases (Income year 2017 for all).
| Database | Number of Residence Households* | Number of Persons | ||
|---|---|---|---|---|
| Unweighted | Weighted | Unweighted | Weighted | |
| EUROMOD/SILC input (LU-Resident population) | 3,833 | 252,336 | 10,493 | 574,184 |
| EUROMOD/HFCS-R input (LU-Resident population) | 1,616 | 226,378 | 4,333 | 535,897 |
| EUROMOD/HFCS-XB input (“Active” Cross-border households) | 2,362 | 147,380 | 7,341 | 418,997 |
-
*
All persons living in the same dwelling, not to be confused with the “residents” who involve inhabitants of Luxembourg.
Table 2
An overall view of the benchmark “STD” (income year 2017) for resident and XB households.
| Data and EUROMOD platforms | SILC | HFCS-R | HFCS-XB (Active households & LU-incomes only) | ||
|---|---|---|---|---|---|
| Population covered by the survey (see Table 1), in persons | 574,184 | 535,897 | 418,997 | ||
| Taxable Income, before Tax allowances, in millions € / year (from tinty_s in HFCS-R, or tinty_lu_s for Active XB households) | 20,808 | 20,041 | 7,947 | ||
| … out of additional amount from XBs not covered by the survey (for subsequent macro adjustment, see Section 2.4) | 1,109 | ||||
| Public Revenue (in millions € / year) | |||||
| Social contributions | [I]* | [II] | [III] | ||
| 3,914 | 3,714 | 2,030 | |||
| whose | Employee | 1,820 | 1,693 | 945 | |
| Self-employed | 178 | 221 | 27 | ||
| Others (Long term care from Social assistance) | 3 | 3 | 0 | ||
| Employers | 1,710 | 1,667 | 1,059 | ||
| Credited (Replacement income, Social assistance, Pensions) | 202 | 130 | 0 | ||
| … out of additional amount from XBs not covered by the survey (for macro adjustment) | 62 | ||||
| Personal Income Tax | [VII] | [VIII] | |||
| 3,289 | 3,439 | 824 | |||
| Implicit Tax Rate on Tax Base (tinty_s – tinta_s, or LU versions if XBs), before Tax Credits | 20.9% | 14.4% | |||
| Global Tax Rate (after Tax Allowances & Credits) = Income Tax / Taxable Income, on average | 17.2% | 10.4% | |||
| … out of additional amount from XBs not covered by the survey (for macro adjustment) | 115 | ||||
| ⇒ Total Public Revenue (before macro adjustment) | 7,203 | 7,153 | 2,855 | ||
| Inequalities | If All Incomes | ||||
| Gini | |||||
| Relative = Abs / (2*Avg) | 0.2524 | 0.2993 | 0.1940 | ||
| Absolute (in € / month) | 1,701 | 2,103 | 1,088 | ||
| Average (in € / month) | 3,371 | 3,513 | 2,804 | ||
| Poverty | |||||
| Line (in € / month) | 1,790 | 1,770 | 1,564 | ||
| Rate | 11% | 13% | 2% | ||
| by Type of Residence Household: | |||||
| Single (<65) | 14% | 16% | 1% | ||
| Single (65+) | 8% | 9% | 2% | ||
| Single with dependent(s) | 31% | 18% | 0% | ||
| Couple - 0 dep | 6% | 5% | 2% | ||
| Couple - 1-2 dep | 11% | 18% | 2% | ||
| Couple - 3+ dep | 14% | 21% | 2% | ||
| "Well-being", as equivalized income (all in € / month), on average | If All Incomes | ||||
| All | 3,371 | 3,513 | 2,804 | ||
| 1st Decile | 1,574 | 1,472 | 1,635 | ||
| by Type of Residence Household: | |||||
| Single (<65) | 3,308 | 3,249 | 2,828 | ||
| Single (65+) | 3,215 | 3,440 | 2,878 | ||
| Single with dependent(s) | 2,473 | 2,661 | 2,530 | ||
| Couple - 0 dep | 3,922 | 4,150 | 3,194 | ||
| Couple - 1-2 dep | 3,117 | 3,292 | 2,768 | ||
| Couple - 3+ dep | 2,673 | 2,826 | 2,353 | ||
-
*
The references [I], [II], ... refer to Table B1 and Table B2 (Appendix B)
Table 3
The components of the taxable income, in €/month [*].
| Component (EUROMOD variable) | Meaning | HFCS-R | HFCS-XB† | ||||
|---|---|---|---|---|---|---|---|
| All incomes | LU-income | ||||||
| Avg ‡ | % of total | Avg ‡ | % of total | Avg ‡ | % of total | ||
| tinty_IT_s | Taxable income, by fiscal household § | 5,392 | 4,537 | 3,492 | |||
| tinta_IT_s | Tax allowances, by fiscal household § | ||||||
| tinty_s | Taxable income, by person | 3,116 | 100% | 2,054 | 100% | 1,581 | 100% |
| bsacm_s | Social assistance | 58 | 1.9% | 22 | 1.1% | 0 | 0.0% |
| il_repl | Replacement income | 10 | 0.3% | 0 | 0.0% | 0 | 0.0% |
| il_taxpen | Taxable pensions | 626 | 20.1% | 19 | 0.9% | 0 | 0.0% |
| yem | Employee gross income | 2,047 | 65.7% | 1,894 | 92.3% | 1,544 | 97.7% |
| yiy | Interest, dividends, profit from capital investments in unincorporated business | 16 | 0.5% | 18 | 0.9% | 14 | 0.9% |
| ypp | Pension from private pension plans | 43 | 1.4% | 0 | 0.0% | 0 | 0.0% |
| ypr | Income from property | 128 | 4.1% | 79 | 3.8% | 0 | 0.0% |
| ypt | Regular inter-household cash transfers received | 16 | 0.5% | 0 | 0.0% | 0 | 0.0% |
| yse | Gross income from self-employment | 172 | 5.5% | 22 | 1.1% | 22 | 1.4% |
-
*
Mean over all 5 imputations (see Section 2.1)
-
†
Averages for “All incomes” and “LU-Income” are considering the whole surveyed population
-
‡
Mean = (weighted) total / number of persons or fiscal households in 2017
-
§
A fiscal household is gathering persons considered as to be taxed jointly on income, taking into account the relevant fiscal rules
Table 4
Share of fiscal households across the classes of tax (in % of Fiscal Households) as resulting from EUROMOD/HFCS-R and EUROMOD/HFCS–XB (mean over all 5 imputations – Section 2.1)
| Proportions, in % of Fiscal Households | ||
|---|---|---|
| Class of Tax | HFCS-R | HFCS-XB (Active Households) |
| 0 | 17% | 9% |
| 1 | 47% | 38% |
| 2 | 37% | 54% |
-
*
Mean over all 5 imputations (Section 2.1)
Table 5
[A - Upper Part] The impact of fiscal brackets (whatever the households’ tax base behind) in the overall implicit tax rate on personal income for class-2 resident fiscal households (couples) – An approximation based on EUROMOD/HFCS-R ♦ [B - Lower Part] The impact of fiscal brackets (whatever the households’ tax base behind) in the overall implicit tax rate on personal income for class-2 active XB fiscal households – An approximation based on EUROMOD/HFCS-XB.
| Part [A] – RESIDENTS) Fiscal Bracket (in €) | Share of Fiscal Households within the bracket, in p.p. (see Figure 4) [a] | Percent of Fiscal Households impacted by that bracket * [b] = [b>] + [a] | Mean Tax Base for that bracket [c] | Lower limit for that fiscal bracket (€, yearly) [d] | Income from tax payers belonging to that bracket, above the Minimum level of Fiscal Bracket [e] = [c] - [d] | Σ of Tax Bases impacted by that Bracket, for 100 fiscal households (€, yearly) [f] = [a] * [e] + [b>] * ([d>] - [d]) | Approximate Marginal Tax Rate (+/- mean tax rate over the bracket †) (2017 STD system) [g] | Income Tax from that Tax Bracket, for 100 fiscal households (€, yearly) [h] = [f] * [g] | % of income Tax from that Tax Bracket [i] = [h] / [k] and Avg % tax below =[k] / [j] |
|---|---|---|---|---|---|---|---|---|---|
| > 0 and < 26,457 | 37.1 | 100 | 17,976 | 0 | 17,976 | 2,330,900 | 6.2% | 144,944 | 17% |
| [26,457-45,897[ | 27 | 62.9 | 35,848 | 26,457 | 9,391 | 950,689 | 28.6% | 271,611 | 31% |
| [45,897-100,002[ | 30.1 | 35.8 | 63,520 | 45,897 | 17,623 | 840,398 | 39.0% | 327,755 | 38% |
| [100,002-150,000[ | 4.2 | 5.7 | 119,684 | 100,002 | 19,682 | 157,891 | 40.0% | 63,156 | 7% |
| [150,000-200,004[ | 1 | 1.5 | 167,270 | 150,000 | 17,270 | 43,312 | 41.0% | 17,758 | 2% |
| ≥ 200,004 | 0.5 | 0.5 | 4,05,658 | 200,004 | 205,654 | 110,230 | 42.0% | 46,297 | 5% |
| Total Tax Bases [j], for 100 fiscal households ⇓ | Total Tax [k] | (Avg % Tax: 19.7%)‡ ‡ | |||||||
| 4,433,421 | 871,521 | ||||||||
| Part [B] – XBs | [a] | [b]=[b>]+[a] | [c] | [d] | [e]= [c] - [d] | [f] = [a] * [e] +[b>] * ([d>] - [d]) | [g] | [h] = [f] * [g] | [i] = [h] / [k](Avg =[k] / [j]) |
|---|---|---|---|---|---|---|---|---|---|
| > 0 and < 26,457 | 47.2 | 100 | 19,199 | 0 | 19,199 | 2,303,022 | 6.3% | 144,668 | 35% |
| [26,457-45,897] | 37.1 | 52.8 | 34,668 | 26,457 | 8,211 | 609,230 | 28.3% | 172,392 | 42% |
| [45,897-100,002] | 15.3 | 15.7 | 60,455 | 45,897 | 14,558 | 243,819 | 39.0% | 95,089 | 23% |
| [100,002-150,000] | 0.4 | 0.4 | 111,375 | 100,002 | 11,373 | 4,549 | 40.0% | 1,820 | 0% |
| [150,000-200,004] | 0 | 0 | 150,000 | 41.0% | |||||
| ≥ 200,004 | 0 | 0 | 200,004 | 42.0% | |||||
| Total Tax Bases [j], for 100 fiscal households ⇓ | Total Tax [k] | (Avg % Tax: 13.1%) § | |||||||
| 3,160,620 | 413,969 | ||||||||
-
*
[b>]” refers to the value of [b] for the fiscal bracket above the present one (e.g. [150,000-200,004[, as for bracket [100,002-150,000[)
-
†
Approximate weighted mean tax rate over the Fiscal Bracket: for example in Part [A], “28.6%” = ( ([a]/100*28%) + ([b]-[a])/100*((20%+38%)/2) ) / ( [b]/100 ), where 28% is the tax rate at [c]-income and 20%/38% are the tax rates at the extremes of this fiscal bracket
-
‡
20.9% on average, all fiscal classes considered for HFCS-R in 2017, including a 7% (mainly) or 9% Tax for Unemployment fund ⇒ about 19.5% without it
-
§
13.8% on average, all fiscal classes considered for HFCS-XB in 2017, including a 7% (mainly) or 9% Tax for Unemployment fund ⇒ about 12.9% without it
Table 6
[A - Upper part] The impact of the fiscal households, given their tax base bracket, in the overall implicit tax rate on personal income for class-2 resident fiscal households (couples) – An approximation based on EUROMOD/HFCS-R ♦ [B - Lower Part] The impact of the fiscal households, given their tax base bracket, in the overall implicit tax rate personal income for class-2 active XB fiscal households (couples) – An approximation based on EUROMOD/HFCS-XB.
| Part [A] – RESIDENTS) Fiscal Bracket (in €) | Share of Fiscal Households within the bracket, in p.p. [a] | Mean Tax Base for that Bracket [b] | Lower limit Fiscal bracket (€, yearly) [c] | Approximate Marginal Tax Rate if Income reaching the Upper limit of the Tax Bracket * (2017 STD system) [d] | Tax receipt per Fiscal Household if Tax Base = lower limit of this Tax Bracket (€/year) † [e] = [e<] + [d<] * ([c] - [c<]) | Tax receipt per Fiscal Household whose Tax Base lays within this Tax Bracket (€/year) [f] = [e] + [d] * ([b] - [c]) | Tax receipt for ALL Fiscal Households whose Tax Base lays within this Tax Bracket, if considering 100 fiscal households on the whole (€/year) [g] = [a] * [f] | % of Income Taxes from Fiscal Households belonging to this Tax Bracket [i] = [g] / [h] | Intensity of Contribution to Personal Income Taxes [j] = [g] / ([a] * [b]) |
|---|---|---|---|---|---|---|---|---|---|
| > 0 and < 26,457 | 37.1 | 17,976 | 0 | 7.5% | 0 | 738 | 27,400 | 3% | 0.04 |
| [26,457-45,897[ | 27 | 35,848 | 26,457 | 29.0% | 1,975 | 4,605 | 124,534 | 14% | 0.13 |
| [45,897-100,002[ | 30.1 | 63,520 | 45,897 | 39.0% | 7,613 | 14,486 | 436,218 | 50% | 0.23 |
| [100,002-150,000[ | 4.2 | 119,684 | 100,002 | 40.0% | 28,714 | 36,586 | 154,833 | 18% | 0.31 |
| [150,000-200,004[ | 1 | 167,270 | 150,000 | 41.0% | 48,713 | 55,793 | 53,338 | 6% | 0.33 |
| ≥ 200,004 | 0.5 | 405,658 | 200,004 | 42.0% | 69,214 | 155,589 | 83,396 | 9% | 0.38 |
| Total Tax Bases [k], for 100 fiscal households ⇓ | Total Tax [h] | (Avg % Tax: 19.8%) ‡ | |||||||
| 4,433,421 | 879,719 | ||||||||
| Part [B] – XBs | [a] | [b] | [c] | [d] | [e] = [e<] + [d<] * ([c] - [c<]) | [f] = [e] + [d] * ([b] - [c]) | [g] = [a] * [f] | [i] = [g] / [h] | [j] = [g] / ([a] * [b]) |
| > 0 and < 26,457 | 47.2 | 19,199 | 0 | 7.5% | 0 | 952 | 44,964 | 11% | 0.05 |
| [26,457-45,897[ | 37.1 | 34,668 | 26,457 | 29.0% | 1,975 | 4,274 | 158,632 | 38% | 0.12 |
| [45,897-100,002[ | 15.3 | 60,455 | 45,897 | 39.0% | 7,613 | 13,290 | 202,832 | 48% | 0.22 |
| [100,002-150,000[ | 0.4 | 111,375 | 100,002 | 40.0% | 28,714 | 33,263 | 13,305 | 3% | 0.3 |
| [150,000-200,004[ | 0 | 150,000 | 41.0% | 48,713 | |||||
| ≥ 200,004 | 0 | 200,004 | 42.0% | 69,214 | |||||
| Total Tax Bases [k], for 100 fiscal households ⇓ | Total Tax [h] | (Avg % Tax: 13.3%) § | |||||||
| 3,160,620 | 419,733 | ||||||||
-
*
Approximate weighted mean tax rate over the Fiscal Bracket: for example, “29.0%” = (20% + 38%) / 2
-
†
“[c<]” refers to the value of [c] for the Fiscal Bracket below the present one (e.g. [100,002-150,000[, as for bracket [150,000-200,004[)
-
‡
20.9% on average, all Fiscal Classes considered for HFCS-R in 2017, including a 7% (mainly) or 9% Tax for Unemployment fund ⇒ about 19.5% without it
-
§
13.8% on average all Fiscal Classes included for HFCS-R in 2017, including a 7% (mainly) or 9% Tax for Unemployment fund ⇒ about 12.9% without it
Table 7
Amending the personal income taxes - The impact of the fiscal households, given their tax base bracket, in the overall implicit tax rate on personal income for class-2 resident fiscal households (couples) – An approximation based on EUROMOD/HFCS-R.
| Fiscal Bracket (in €) | Share of Fiscal Households within the bracket, in p.p. [a] | Mean Tax Base for that Bracket [b] | Lower limit Fiscal bracket (€, yearly) [c] | Approximate Marginal Tax Rate if Income reaching the Upper limit of the Tax Bracket * (2017 STD system) [d] | Tax receipt per Fiscal Household if Tax Base = lower limit of this Tax Bracket (€/year) † [e] = [e<] + [d] * ([c] - [c<]) | Tax receipt per Fiscal Household whose Tax Base lays within this Tax Bracket (€/year) [f] = [e] + [d] * ([b] - [c]) | Tax receipt for ALL Fiscal Households whose Tax Base lays within this Tax Bracket, if considering 100 fiscal households on total (€/year) [g] = [a] * [f] | % of Income Taxes from Fiscal Households belonging to this Tax Bracket [i] = [g] / [h] | Intensity of Contribution to Personal Income Taxes [j] = [g] / ([a] * [b]) |
|---|---|---|---|---|---|---|---|---|---|
| > 0 and < 26,457 | 37.1 | 17,976 | 0.00 | 7.5% | 0 | 738 | 27,400 | 3% | 0.04 |
| [26,457-45,897[ | 27.0 | 35,848 | 26,457 | 29.0% | 1,975 | 4,605 | 124,534 | 14% | 0.13 |
| [45,897-100,002[ | 30.1 | 63,520 | 45,897 | 40.0% | 7,613 | 14,662 | 441,525 | 49% | 0.23 |
| [100,002-150,000[ | 4.2 | 119,684 | 100,002 | 42.0% | 29,255 | 37,521 | 158,789 | 18% | 0.31 |
| [150,000-200,004[ | 1.0 | 167,270 | 150,000 | 44.0% | 50,254 | 57,852 | 55,307 | 6% | 0.35 |
| ≥ 200,004 | 0.5 | 405,658 | 200,004 | 46.0% | 72,255 | 166,856 | 89,435 | 10% | 0.41 |
| Total Tax Bases [j], for 100 fiscal households ⇓ | Total Tax [k] | (Avg % Tax: 20.2%) ‡ | |||||||
| 4,433,421 | 896,990 | ||||||||
-
*
Approximate weighted mean tax rate over the Fiscal Bracket: for example, “29.0%” = (20% + 38%) / 2
-
†
“[e<]” refers to the value of [c] for the Fiscal Bracket below the present one (e.g. [100,002-150,000[, as for bracket [150,000-200,004[)
-
‡
21.4% on average, all Fiscal Classes considered for HFCS-R in 2017, including a 7% (mainly) or 9% Tax for Unemployment fund ⇒ about 20.0% without it
Table 8
An overall view of the benchmark “STD” and an alternative fiscal policy for Residents and XBs (income year 2017).
| EUROMOD models (out of MACRO adjustment) | |||||
|---|---|---|---|---|---|
| EUROMOD /HFCS-R | EUROMOD/ HFCS-XB (Active households) | ||||
| STD | Alternative policy | STD | Alternative policy (LU-Incomes only) | ||
| Population covered by the surveys | 535,897 | 418,997 | |||
| Taxable Income, before Tax allowances (for XBs, LU-incomes only) in millions € / year [a + b] | 20,041 | 9,056 | |||
| a] Covered by the surveys (for XBs, LU-incomes only) | 20,041 | 7,947 | |||
| b] Additional amount not covered by the XB survey | 1,109 | ||||
| Total Public Revenue (in millions € / year) | |||||
| Social contributions [c + d] | 3,714 | 3,714 | 2,092 | 2,092 | |
| c] Resulting from the microsimulation (based on HFCS surveys) | 3,714 | 3,714 | 2,030 | 2,030 | |
| d] Contribution for XBs not covered by the HFCS-XB survey (evaluated based on b] and while hypothesizing that those persons are all retired) | 62 | 62 | |||
| Personal Income Tax [e + f] | 3,439 | 3,517 | 939 | 947 | |
| e] Resulting from the microsimulation (based on HFCS surveys) | 3,439 | 3,517 | 824 | 832 | |
| f] Additional tax from XBs not covered by the HFCS-XB survey (evaluated based on b] while hypothesizing that the tax rate applicable is the one determined for the covered households after tax credits [*]) | 115 | ||||
| and Tax Rates | |||||
| Global Tax Rate on Tax Base, before Tax Credits, on average and through the HFCS surveys | 20.9% | 21.4% | 14.4% | 14.5% | |
| [*] Global Tax Rate, after Tax Credits, through the HFCS surveys [e/a] | 17.2% | 17.5% | 10.4% | 10.5% | |
| ⇒ Total Revenue | Through the surveys, LU-incomes only for XBs [c + e] (in millions € / year) | 7,153 | 7,231 | 2,855 | 2,862 |
| With macro adj., for XBs [c + d + e + f] | 3,032 | 3,039 | |||
| General (Residents + XBs, including macro adjustment) (in millions € / year) | STD: 10,185 | Alternative: 10,270 | |||
| Inequalities | |||||
| Gini | All Incomes | ||||
| Relative = Absolute gap / (2*Average) | 0.2993 | 0.2966 | 0.1940 | 0.1934 | |
| Absolute gap, on average (in € / month) | 2,103 | 2,074 | 1,088 | 1,084 | |
| Average well-being (in € / month) | 3,513 | 3,496 | 2,804 | 2,802 | |
| Poverty | All Incomes | ||||
| Line (in € / month) | 1,770 | 1,768 | 1,564 | 1,564 | |
| Rate | 13% | 13% | 2% | 2% | |
| "Well-being", as equivalized income (all in € / month), on average | All Incomes | ||||
| All | 3,513 | 3,496 | 2,804 | 2,802 | |
| 1st Decile | 1,472 | 1,472 | 1,635 | 1,635 | |
| 9th Decile | 4,943 | 4,923 | 3,820 | 3,816 | |
Table A1
Final imputations in HFCS-XB, ex ante EUROMOD.
| EUROMOD Variable | Imputation | Origin (in % of total) | Remarks | |||
|---|---|---|---|---|---|---|
| Name | Content | in % of (yem + yse) at household level | if another base | From LU | From ABROAD | |
| poa | Old-age Pension | 20.3% if 1 pensioner in the household, 42.5% for each pensioner if more than 1, and 0.2% if no pensioner | 0 | 100% | 0.2% if no pensioner preferred to “0”, in conformity to HFCS-R | |
| psu | Survival Pension | 0 | 0 | 0 | Incorporated in the imputation of “poa” | |
| xmp | Maintenance payment | 0 | 0 | 0 | Lower amounts | |
| yiy | Investment income | 1.9% | In conformity with proportions in HXG0100x (total gross household income, separated based on its origins, LU versus other countries altogether) | May come from LU or other capital investments | ||
| yot | Other income by children < 16 | 1.3% | 0 | 100% | Mainly from children, hence from “home” | |
| ypp | Private pension | 0 | 0 | 0 | Lower amounts (in LU !) | |
| ypr | Property income | 4.1% | 0 | 100% | “Properties” supposed from ABROAD | |
Table B1
Macro adjusting outcomes for dealing with missing XB households, uncovered up to now through the EUROMOD/HFCS (and SILC) data and platforms – Social contributions.
| C] SOCIAL CONTRIBUTIONS | |||||
| Reference | Component | Computation information | Value (in Millions €/year or %) | ||
| [I] | From model platforms (cf. Table 2) | SILC (Social contributions) | 3,914 | ||
| [II] | HFCS-R (Social contributions) | 3,714 | |||
| ⇒ HFCS-R [II], in % of SILC [I] | = [II] / [I] | 94.9% | |||
| [III] | HFCS-XB (Social contributions for Active households & LU-incomes only) | 2,030 | |||
| [%1] | ⇒ HFCS-XB [III[, in % of HFCS-R [II] | = [III] / [II] | 54.7% | ||
| [SC/HFCS+] == [IV] | ⇒ C.1] Social contributions for populations covered through HFCS-R & XB surveys | = [II] + [III] | 5,745 | ||
| [SC/SILC+] | Alternatively, Residents/SILC + XBs in % of SILC | = [I] * (1 + [%1]) | 6,054 | ||
| ⇒ [SC/HFCS+], in % of [SC/SILC+] | 94.9% | ||||
| C.2] MACRO Correction for Social Contributions from gross income from XBs not covered by the HFCS/XB survey | |||||
| [V] | Additional gross LU-income from XBs not covered by the HFCS/XB survey, based on Pensions paid to XBs from Luxembourg in 2017 (considered as the LU-taxable income for that sub-population), whereas Pensions received by XBs covered by the HFCS survey are considered as from foreign origin only | 1,109 | |||
| [VI] | ⇒ Additional contribution for XBs not covered by HFCS surveys (considering 2.8% * 2 of contributions for Health In-Kind, as for pensioners) | = [V] * 5.6% | 62 | ||
| [%2] | ⇒ Total Social Contributions from XBs, in % of SC from RESIDENTS | = ([III] + [VI]) / [II] | 56.3% | ||
| [SC/HFCS++] | ⇒ C.3] TOTAL SOCIAL CONTRIBUTIONS, if considering All XBs, including those not covered by the HFCS/XB survey on top (based on HFCS) | = [IV] + [VI] = [II] + [III] + [VI] | 5,807 | ||
| Alternatively, if based on SILC, completed by HFCS data for XBs | = [I] * (1 + [%2]) | 6,120 | |||
Table B2
Macro adjusting outcomes – Personal income taxes.
| T] PERSONAL INCOME TAX (as for LU-Incomes, unless otherwise mentioned) | ||||
| Reference | Component | Computation information | Value (in Millions €/year or %) | |
| [VII] | From model platforms (cf. Table 2) | SILC (Personal Income Tax) | 3,289 | |
| [VIII] | HFCS-R (Personal Inc Tax) | 3,439 | ||
| ⇒ HFCS-R, in % of SILC | = [VIII] / [VII] | 105% | ||
| [IX] | HFCS-XB (Personal Income Tax for Active households & LU-incomes only) | 824 | ||
| [%3] | ⇒ HFCS-XB, in % of HFCS-R | = [IX] / [VIII] | 24% | |
| [TAX/HFCS+] | ⇒ T.1] Personal Income Taxes for populations covered through HFCS-R & XB surveys | = [VIII] + [IX] | 4,263 | |
| [TAX/SILC+] | Alternatively, Residents/SILC + XBs in % of SILC | = [VII] * (1 + [%3]) | 4,077 | |
| ⇒ [TAX/HFCS+] in % of [TAX/SILC+] | 104.6% | |||
| T.2] MACRO Correction for Personal Income Tax from gross income of XBs not covered by the HFCS/XB survey | ||||
| [X] | T.2.1] Total Taxable Income of HFCS-XBs (covered by the survey, LU-Incomes only), before Tax Allowances | = EUROMOD variable "tinty_lu_s" (on average) * 12 * HFCS-XBs Population in 2017 / 1,000,000 | 7,947 | |
| [XI] | Total Tax Allowances for XBs/HFCS (LU-incomes) | = EUROMOD variable "tinta_lu_s" (on average) * 12 * HFCS-XBs Population in 2017 / 1,000,000 | 1,627 | |
| [XII] | Income Tax for HFCS-XBs before Tax credits (LU-Incomes) | = "tin_lu_s" (/ year & for whole covered population) | 911 | |
| [XIII] | ⇒ Implicit Tax Rate on Tax Base for HFCS-XBs, before Tax Credits | = [XII] / ([X] - [XI]) | 14.4% | |
| [XIV] | Total Tax Credits for HFCS-XBs | = [XII] - [IX] | 87 | |
| [%4] | ⇒ HFCS-XBs' Global Tax on Taxable Income, after Tax Credits, LU-Incomes only | = [IX] / [X] | 10.4% | |
| T.2.2] Additional gross income from XBs not covered by the HFCS/XB survey, based on Pensions paid to XBs from Luxembourg in 2017 | [V] | 1,109 | ||
| [XV] | ⇒ Total Tax on Income for XB households not covered by the HFCS/XB survey, if Residents' average rate [%4] applied | = [V] * [%4] | 115 | |
| [XVI] | & Equivalent computation taking into account Tax Allowances and Tax Credits | = ([V] - [XI] * [V]/[X]) * [XIII] - ([XIV] * [V]/[X]) | 115 | |
| [%5] | ⇒ Total Income Tax from ALL XBs, in % of Tax from RESIDENTS | = ([IX] + [XV]) / [VIII] | 27.3% | |
| [TAX/HFCS++] | ⇒T.3] TOTAL TAXES, if considering All XBs, including those not covered by the HFCS/XB survey on top | = [TAX/HFCS+] + [XV] | 4,378 | |
Table B3
Macro adjusting outcomes for dealing with missing XB households, uncovered up to now through EUROMOD/HFCS – overall consolidation.
| R] TOTAL PUBLIC REVENUE: SOCIAL CONTRIBTIONS and PERSONAL INCOME TAXES as for LU accounts (hence from LU Incomes) & including ALL Cross-border households (whatever active or not) & Residents | |||
|---|---|---|---|
| Reference | Component | Computational information | Value (in Millions €/year or %) |
| [TOT/ HFCS++] | Total Public Revenue from Residents/HFCS + ALL XBs, if through HFCS data and models | = [SC/HFCS++] + [TAX/HFCS++] | 10,185 |
| [TOT/ SILC++] | Alternatively, Residents/SILC + ALL Cross-Borders considered through an additional % (derived from HFCS) | = [I] * (1 + [%2]) + [VII] * (1+ [%5]) | 10,307 |
| ⇒ [TOT/HFCS++] in % of [TOT/SILC++] | 98.8% | ||
Data and code availability
The analysis builds on data from [i] the “European Union Statistics on Income and Living Conditions” (EU-SILC) survey Wave 16, available for scientific research upon request to EUROSTAT, [ii] the third wave of the Eurosystem Household Finance and Consumption Survey (HFCS) for residents, available for scientific research upon request to the European Central Bank, [iii] the third wave of the Luxembourg Household Finance and Consumption Survey for Cross-Border Commuters (for access requests, contact the Luxembourg Institute of Socio-Economic Research at dataservice@liser.lu or marc.schneider@liser.lu) and [iv] the EU-wide micro-simulation model EUROMOD (I4.62+ Beta release / 3.4.10) available upon request to the EU-Joint Research Center in Seville. Details of STATA routines for the creation of the EUROMOD input datasets from HFCS raw data and specific policy codes are available from the author upon request.
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