Every year, many employees in Luxembourg pay more tax than necessary simply because they do not claim certain deductible expenses. Here are the six items we systematically check for our clients, residents and cross-border workers alike.
1. Mortgage interest on your home
If you bought your main residence with a loan, the interest paid can be deducted, within ceilings that depend in particular on the size of your household and the date you moved in.
2. Insurance premiums and loan interest
Certain insurance premiums (life, death, third-party liability) and interest on personal loans are deductible special expenses, within an annual ceiling that increases with the number of dependants.
3. Home savings plan
Payments into a home savings plan (Bausparvertrag) with an approved institution are deductible, within a ceiling. It is often a costly oversight.
4. Private pension plan
Contributions to an approved private pension plan are deductible every year, within a ceiling. They prepare your retirement while reducing your tax.
5. Childcare and household help
Nursery, childcare or domestic help costs can give rise to a tax allowance, under conditions and within a ceiling.
6. Donations
Donations to approved organisations in Luxembourg (or in the European Union, under conditions) are deductible above a minimum annual amount.
Cross-border workers: opting to be taxed as a resident
If you live in France, Belgium or Germany and work in Luxembourg, you may, under conditions, ask to be taxed as a resident. This option can give you access to these deductions and a more favourable rate, especially when most of your professional income is taxable in Luxembourg. It is not always beneficial: both scenarios must be compared.
Have your tax return checked
Ceilings and conditions change regularly. At INFID Advisory, we prepare your Luxembourg tax return, check each of these deductions and review the tax assessment. Discover our tax return service, from €100 excl. VAT.
