Posted on
Maximise your tax savings: What you can deduct in Luxembourg
Maximise your tax return in Luxembourg. Discover which expenses you can deduct, from housing and loans to donations and work-related costs.
What can I deduct from taxes?
In Luxembourg, tax deductions allow you to subtract certain expenses from your taxable income, thereby reducing your overall tax burden or maximizing your tax refund. These deductible expenses are categorized mainly into acquisition fees, special expenses, extraordinary expenses, and deductions related to homeownership and rental income.
Special expenses
These have a standard maximum deduction of 672€ per household member and cover a range of expenditures, such as:
- Debit interest on consumer loans
- Insurance contributions and premiums, including:
- Car insurance (third-party liability and driver protection)
- Home insurance (third-party liability)
- Supplementary health insurance (CMCM, DKV...)
- Life insurance
Housing savings plans (BHW, Wüstenrot) (per household member):
- Up to 1.344€ for subscribers aged 18-41
- Up to 672€ for those over 41
Old-age pension contributions
- Up to 3.200€ per taxpayer
Donations
- Minimum total of 120€
Deductions for Homeowners
If you are a homeowner, you can benefit from specific tax deductions, including: mortgage interest payments on your primary residence.
| Availability Date | Deductible Mortgage Interest Limit |
|---|---|
| After 31/12/2022 | Full deduction |
| Between 31/12/2018 and 01/01/2023 | €4,000 |
| Between 31/12/2013 and 01/01/2019 | €3,000 |
| Before 01/01/2014 | €2,000 |
Note:
Notary fees and bank commissions related to the acquisition are also deductible in the year of purchase.
Deductions for Landlords
Owning and renting out property in Luxembourg comes with tax advantages. If you earn rental income, you can deduct:
- Property management fees, repairs, and maintenance costs
- Mortgage interest on rental properties
- Property depreciation to offset taxable income
Acquisition fees
These are work-related expenses, with a standard minimum deduction of 540€.
If you are a professional, you may have certain expenses related to your work that qualify for deductions. For example:
- Contributions to professional chambers and unions (e.g. LCGB, OGBL)
- Books used exclusively for professional purposes
- Professional clothing and work tools
- Continuing education expenses, if required by your employer
Extraordinary expenses
These are unavoidable expenses that significantly impact your financial capacity. Examples include:
- Medical expenses not reimbursed by CNS or supplementary health insurance
- Divorce-related costs
- Civil court costs
- Funeral expenses
- Financial maintenance for dependents
- Doctor-prescribed dietary plans
Domestic expenses
You can deduct expenses related to employing domestic staff or childcare services.
Cleaning expenses
- Expenses for legally declared domestic staff
- Invoices from professional cleaning companies
Childcare expenses
- Public and private daycare center fees
- Licensed daycare facilities
- Relay houses (maisons relais)
Deduction limit: 5.400€ per year
How does tax deduction work?
Tax deductions are applied through your annual tax return. By reporting your income and eligible expenses, the Luxembourg tax authorities calculate your taxable income and determine your tax liability. If you overpaid, you'll receive a refund; if underpaid, you'll need to settle the difference.
What should I consider when deducting expenses from taxes?
To maximize your tax benefits, consider the following:
- Keep thorough records and documentation for all deductible expenses
- Stay informed about changes in tax laws
- Seek professional assistance (tax preparation services like taxx.lu) to ensure compliance
- Or better yet, use taxx.lu for a simple, up-to-date, compliant, and tax-optimized online experience!
Final thoughts
By understanding and applying these deductions, you can effectively reduce your taxable income and optimize your tax situation in Luxembourg. Taking the time to review your eligible deductions and keeping accurate records will help you make the most of available tax benefits.
Make your life easier with taxx.lu. Our step-by-step tax return process guides you through all possible deductions, just complete all necessary information and documents.
Disclaimer
All tax deductions mentioned in this blog post are subject to approval by the Luxembourg tax authorities. The acceptance of any deduction depends on individual circumstances and compliance with tax regulations.
Need help or assistance ? Our support team is always ready to help you via chat or per email at help@taxx.lu.
