In week 4 we touched on expenses deducted against each category of income. In addition, there are some special expenses that can be claimed by all resident taxpayers regardless of the source of their income. A standard deduction of €480 (single) / €960 (jointly taxed and both employed) is applied unless certain actual deductions are higher.
Social security – Luxembourg and foreign social security contributions can be deducted (subject to some limitations).
Mortgage interest – mortgage interest paid on your main residence can be deducted up to €1,000 – €2,000 per member of your household, depending on how long you have occupied the property.
Debit interest & Insurance premiums – interest paid on private loans (excluding mortgages) premiums paid for life, medical, death 3rd party liability etc. are deductible up to €672 per member of your household.
Home saving scheme – contributions to approved schemes are deductible up to €672 per member of your household. This limit is doubled where one spouse is under 40 years old at the start of the tax year
Personal pensions – contributions to Luxembourg plans (or non-Luxembourg plans that have the same conditions) can be deducted up to €3,200.
Charitable contributions – contributions to recognised charities (€120 – €1m/ 20% of income) are deductible
Alimonies– amounts paid to a divorced spouse and/or children living outside the household (€24,000 (spouse) and €4,050 per child under certain conditions) can be deducted
Childcare/Housekeeping – costs for registered cleaners/housekeepers and/or crèche/nursery/daycare for children under 14 limited to €450 per month are deductible.
E-bike/E-car – a credit can be requested upon the purchase of environmentally sustainable transport up to €5,000 (car) and €300 (bicycle).
Extraordinary expenses – in rare cases, significant expenses incurred in extraordinary situations can be deducted depending on expenses incurred and income levels. Expenses must exceed a % of income based on family size/income level so in practice this is rarely seen.
Extraprofessional abatement – for jointly taxed couples where both parties are working, an abatement of €4,500 can be claimed.
Child/single parent credits – additional credits can be claimed for bearing children and by single parents. Amounts claimed via tax returns will be reduced by any amounts/allowances paid directly.
When claiming additional deductions it’s important to remember to attach evidence such as receipts for each item to your tax return.