How to deduct tax charges from your annual income ?
As a Luxembourg taxpayer, you have the possibility to deduct tax charges from your annual income. If you have no idea how it works, this summary of deductible expenses will give you a clear overview of what can be deducted.
You must be a Luxembourg citizen and resident on the national territory. If you live in a neighboring country like France, it is possible to request assimilation to be taxed as a resident.
Mortgage relating to the main residence
Since 2017, the State of Luxembourg has set tax ceilings on mortgages obtained for the construction of a main dwilling. These are the deductible expenses :
- From the first year of occupation to the first five years, the deductible charge is EUR 2,000.
- Over the next 5 years, the deductible charge is EUR 1,500.
- From the eleventh year the deductible charge is EUR 1,000.
Deductible tax related to the profession
- Travel expenses to work place
- Purchases related to the profession (fees of obtaining)
- Those sums are deductible if they are greater than 540 EUR.
- Expenses for disabled persons
They are increased according to the degree of disability (from 25% to 100% corresponding to a margin of EUR 645 to EUR 1,020).
Fees related to unoccupied accommodation
These expenses relate to renovation or construction work on a building that is not occupied. These fees are not to be confused with those related to the investment.
- Property tax
- The single commission
- Application fee
- Fees related to the credit obtaining process
- Deed of mortgage obligation
- Other expenses related to the loan
Annuities paid to an ex-spouse
There are prerequisites for this deduction. In addition to this, they vary according to the types of annuities :
- Life annuities
- Alimony payments
- Specific obligations
Deductible fees for clean mobility
The deductible amounts are as follows :
- EUR 300, if you buy a bicycle or an electrically assisted bicycle with a speed limited to 25 km/h and a power of 0.25 kW.
- The deductible charge is EUR 2,500 if you buy a plug-in hybrid vehicle. However, its CO2 emission must not exceed 50 g per km.
- EUR 5,000 are deductible for the purchase of a 100% electric vehicle, or one that runs on hydrogen.
Expenses deductible from social security
Under conditions and upon submission of some supporting documents, the deductible expenses are:
- Pension insurance
- Health insurance
- Other contributions
Deductible expenses on personal credit
The loan is deductible if it was used to make one of the following purchases :
- To buy a car
- A private piece of furniture
- Any other purchase that falls within the scope of a personal need (finance holidays, buy land, etc.).
However, not deductible:
- Expenses related to the purchase of a home
- Investments for profit
Deduct housing savings
Under some conditions (financing of a main residence, savings paid into one of the only three approved savings banks in Luxembourg, etc.), the following are deductible :
- EUR 1,344 for a subscriber aged between 18 and 41 years old
- EUR 672 for a subscriber over 41 years old.
Deduct old-age insurance premiums
The deductible amount is EUR 3,200. But this is only possible under conditions. For example, the contract must be valid for 10 years and the cumulative sum must be payable between 60 and 75 years of age.
Expenses deductible from a supplementary pension scheme
EUR 1,200 is deductible. But this is only possible under some conditions (such as filling in page 14 box 1435 of model 100 of the tax return).
Deduction of gifts, donations
Provided that some conditions are met (for example, donations must be made to charitable organizations or foundations), the following amounts are deductible :
- A minimum of EUR 120.
- A maximum of EUR 1,000,000, ie 20% of the total amount of the donation.
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