Taxpayers have until 31 March to complete their tax returns which will be available on the internet from 4 February 2019. Some expenses related to housing, spending and subscriptions may give rise to tax deductions. Follow the guide!

Income tax is deducted at source in Luxembourg and is applied to both resident and non-resident taxpayers.

It is calculated after the end of the tax year based on a tax return. Once completed, the tax return can be sent either to the relevant tax office or electronically via the MyGuichet.lu website.

Deductions related to housing

Under certain conditions, taxpayers may deduct some of the expenses they have incurred from their taxable income, such as contributions paid under a loan and savings contract taken out in Luxembourg or in one of the member states of the European Union.

There are also deductions in respect of interest on mortgages for the acquisition, construction, alterations and renovations of the principal residential property of the taxpayer.

It should be noted that if renovation work is carried out during the period of non-occupation of the property, this may be deductible as a necessary expense. The amount for this work must be less than 20% of the value of the property and must be related to a renovation and not an improvement.

Other deductions

Travel expenses are eligible for a tax reduction which appears on the tax retention card of a resident and non-resident employee.

In addition, donations to bodies working in the public interest are deductible as special expenses. The annual amount must be greater than or equal to € 120 and must represent up to 20% of the total taxable income.

Taxation of cross-border workers

With regard to cross-border workers, Luxembourg has not provided for a derogatory tax regime and applies the general rule of taxation at source to them. For this purpose, the Grand Duchy has signed bilateral agreements with neighbouring countries (Germany, Belgium and France) in order to avoid double taxation of non-residents.

Omission or error

In the event of any omission or error in the tax return, whether sent by post or electronically, taxpayers should contact the relevant tax office.

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