Requesting a tax allowance for extraordinary expenses

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Taxpayers can apply for a tax deduction on their taxable income in the case of extraordinary expenses (charges extraordinaires - CE) which are inevitable and considerably reduce their taxpaying ability.

An expense is deemed extraordinary if it is not incurred by the majority of taxpayers who are in similar circumstances in terms of family situation and the amount of income and assets.

Extraordinary expenses cannot, however, be operating expenses or professional expenses, or be economically related to exempt income.

Only the costs that remain to be paid by the taxpayer can be subject to a tax allowance for extraordinary expenses. For example, expenses covered by a health fund or a private mutual insurance cannot be deducted as extraordinary expenses.

Who is concerned

Resident taxpayers and non-resident taxpayers treated as resident taxpayers can deduct all extraordinary expenses incurred during the tax year from their taxes.

Prerequisites

Definition of extraordinary expenses (CE)

Expenses that the taxpayer wants to deduct must form part of the extraordinary expenses (CE).

Extraordinary expenses are defined as being inevitable expenses which are likely to significantly reduce the taxpayer's taxpaying ability.

An expense is inevitable when a taxpayer cannot avoid it for material, legal or moral reasons.

The burden must significantly reduce the taxpayer's ability to pay. A taxpayer's ability to pay taxes varies according to their family status and financial situation.

Taxpayers may have to cover expenses without being entitled to a tax relief for extraordinary expenses (CE). This "normal tax burden" corresponds to a certain percentage of taxable income and may vary as follows:

Since the tax year 2008, the CE have reduced the taxpayer's taxpaying ability based on their tax class and to the extent that the expenses exceed the percentages reproduced below.
Tax class	1	2 or 1a
Number of children giving rise to a tax deduction	0	0	1	2	3	4	5
Taxable income of less than EUR 10,000	2 %	0 %	0 %	0 %	0 %	0 %	0 %
Taxable income between EUR 10,000 and EUR 20,000	4 %	2 %	0 %	0 %	0 %	0 %	0 %
Taxable income between EUR 20,000 and EUR 30,000	6 %	4 %	2 %	0 %	0 %	0 %	0 %
Taxable income between EUR 30,000 and EUR 40,000	7 %	6 %	4 %	2 %	0 %	0 %	0 %
Taxable income between EUR 40,000 and EUR 50,000	8 %	7 %	5 %	3 %	1 %	0 %	0 %
Taxable income between EUR 50,000 and EUR 60,000	9 %	8 %	6 %	4 %	2 %	0 %	0 %
Taxable income over EUR 60,000	10 %	9 %	7 %	5 %	3 %	1 %	0 %

Example:

A taxpayer with a child belonging to their household has a taxable annual income of EUR 72,000.
Childcare expenses: EUR 9,000 per year (EUR 750 per month)
Medical expenses (not reimbursed): EUR 2,500
Total expenditure: EUR 11,500

Calculation of the normal tax burden in tax class 1a or 2: 72,000 X 7 % = EUR 5,040 tax allowance for
extraordinary expenses: 11,500 - 5,040 = EUR 6,460

In the example above, the normal tax burden is EUR 5,040. Only expenses that exceed the normal tax burden are considered extraordinary expenses and are deductible, i.e. EUR 6,460 in this example.

Types of extraordinary expenses

Child care expenses

Child care expenses include the costs for the placement of a child in a duly accredited day and night care establishment or a daycare establishment. These also include expenses for duly accredited crèches, daycare facilities or collective care facilities, drop-in centres and childminders.

A tax deduction is also granted for childcare expenses incurred in another Member State of the European Union, provided that the person or body is recognised by the competent authorities of the Member State.

Expenses for domestic services

Expenses for domestic services include amounts incurred for household helpers, housekeepers and other domestic staff. Expenses related to household personnel are not deductible unless:

household helpers, housekeepers and other domestic staff are affiliatedby the taxpayer or the helper's employer (the cleaning company) with the Joint Social Security Centre (Centre commun de la sécurité sociale); and
these workers mainly carry out domestic tasks in the taxpayer's home; and
the persons in question are hired by the taxpayer directly as salaried workers or by a cleaning company acting as intermediary.

Expenses incurred for the employment of gardeners, drivers or concierge staff are not tax deductible.

Aid and care expenses

These are expenses for assistance and care services due to the state of dependency of the taxpayer, their spouse or partner, or a child who does not qualify for a tax allowance for children who do not form part of the taxpayer's household.

Costs related to maintenance, education or vocational training

Costs related to the maintenance, education or vocational training of children cannot give rise to a deduction of extraordinary expenses (CE).

These expenses are systematically taken into consideration either by the tax reduction for children if the child forms part of the taxpayer's household, or by the tax allowance for children who do do not form part of the taxpayer's household.

Maintenance, education and vocational training of close relatives taken into the household of the person paying for their support

These expenses include expenses incurred for the maintenance, education and training of close family members, which are deductible if no other person can be made responsible for these expenses or if there is a legal maintenance obligation.

The Civil Code provides for the obligation to provide support to certain relatives by blood or marriage, if the latter are in need. A reciprocal obligation of support exists between descendants and forebears, between sons- and daughters-in-law on the one hand, and stepfathers and stepmothers on the other hand, between adopted children and adoptive parents, and between spouses (even if legally separated).

Expenses will be reduced by the available resources of the person being cared for.

Child maintenance/support payments

Child maintenance payments to a separated or divorced spouse by virtue of a court order issued before 1 January 1998 are deductible as extraordinary expenses if the divorced spouses have not filed a joint application for the deduction of child maintenance payments as special expenses and insofar as they exceed the taxpayer's normal tax burden.

Child maintenance payments determined by a court order after 31 December 1997 are deductible as special expenses.

Other expenses that may be deducted

Other types of expenses may be deducted as extraordinary expenses, including:

those related to a divorce proceeding (legal expenses, attorneys' fees);
those related to a criminal trial, provided the taxpayer is acquitted;
those related to an illness not covered by a health insurance, a medical-surgical health fund, a private insurance, a long-term care insurance, etc.;
expenses incurred for disability, infirmity or reduction in work capacity;
expenses related to specific dietary needs (in case of liver, kidney or bile disease, tuberculosis, diabetes or multiple sclerosis, etc.);
funeral expenses that are not supported by a death benefit fund, by the financial resources of the deceased, etc.

Specific conditions for non-resident taxpayers

In order to deduct most extraordinary expenses, non-resident taxpayers must submit a tax return, provided they meet the conditions to be treated as a resident for tax purposes.

Only the costs for the maintenance and education of children who do not form part of their household (including maintenance payments) can be deducted by an annual adjustment or by a listing of the expenses on their tax card.

How to proceed

Deducting extraordinary expenses as actual costs

Extraordinary expenses can be deducted based on the principle of actual costs (costs actually incurred).

Deducting the charges by a flat-rate allowance

The deduction of extraordinary expenses by a flat-rate allowance is only possible for 3 types of expenses:

expenses for domestic services, assistance and care services, and childcare services;
expenses related to the taxpayer's state of disability or infirmity;
expenses concerning a child who does not form part of the taxpayer's household.

Expenses for domestic services, assistance/care services and childcare services

Taxpayers can deduct a maximum flat-rate tax allowance of EUR 450 per month or EUR 5,400 per year.

The flat-rate tax allowance may not exceed the costs actually incurred.

In the case of combined expenses for domestic services, assistance/care services and childcare services, the tax allowance is granted only once.

Expenses related to the taxpayer's state of disability or infirmity

These expenses can be deducted with flat-rate tax allowance based on the rate of reduction in the taxpayer's working capacity.

The flat-rate tax allowance may not exceed the costs actually incurred.

Deduction of extraordinary expenses

To deduct extraordinary expenses:

resident or non-resident taxpayers treated as residents can submit an income tax return and indicate the amounts paid on page 15 of the income tax return (form 100); or
resident taxpayers can enter the amounts paid on page 6 of the form 163 R F(annual adjustment) if they do not meet the conditions for filing an income tax return. The request for annual adjustment can also be submitted directly online via MyGuichet.lu by filling out an interactive questionnaire; or
the resident taxpayer can enter the amounts paid on their tax card during the year. To do so, they have to fill in the amounts paid on page 6 of the 164 R form;
the married salaried taxpayer or pensioner (resident or non-resident treated as resident) can declare the amounts paid in the application for simulation or individual taxation / RTS rate in order for them to be taken into account when establishing the projected tax rate on their tax card.

The non-resident may also claim the expenses for the maintenance and education of children who do not form part of their household (including maintenance payments) by annual adjustment (page 2 of form 163 NR) or by listing the expenses on their tax card (page 2 of form 164 NR).

Supporting documents

Taxpayers can attach the total amount of expenses not reimbursed, briefly described and dated, to any application. As the allowance for extraordinary expenses (CE) can be calculated in 2 ways, as a flat-rate allowance or by deducting the normal tax burden, the taxpayer is entitled to the most favorable amount.

Taxpayers can claim the actual costs on the basis of a copy of the supporting documents. They can also provide a copy of a medical certificate detailing the precise circumstances.

 The Luxembourg Inland Revenue reserves 
 the right to request additional supporting 
 documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its offices.

Forms / Online services

Pour les contribuables mariés : demande de simulation ou d'individualisation / taux RTS

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Für verheiratete Steuerpflichtige: Simulation oder Antrag auf Einzelveranlagung / Steuersatz RTS

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Décompte annuel - Modèle 163 - 2022

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Déclaration pour l'impôt sur le revenu pour personnes physiques résidentes et non résidentes (modèle 100)

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Einkommensteuererklärung für ansässige und nicht ansässige Personen (Vordruck 100)

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Décompte annuel (personnes physiques résidentes salariées ou pensionnées non soumises à une imposition par voie d'assiette - 163 R)

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Lohnsteuerjahresausgleich (ansässige steuerpflichtige Arbeitnehmer und Rentner die nicht einer Besteuerung durch Veranlagung unterliegen - 163 R)

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Décompte annuel (personnes physiques non résidentes salariées ou pensionnées non soumises à une imposition par voie d'assiette - 163 NR)

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Lohnsteuerjahresausgleich (nichtansässige steuerpflichtige Arbeitnehmer und Rentner die nicht einer Besteuerung durch Veranlagung unterliegen - 163 NR)

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Demande en établissement, rectification, inscription d'une modération ou établissement d'un duplicata d'une fiche de retenue pour contribuables résidents (Modèle 164 R F)

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Antrag auf Ausstellung, Berichtigung, Eintragung einer Ermäßigung oder Ausstellung eines Duplikates einer Steuerkarte für ansässige Steuerpflichtige (Vordruck 164 R D)

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Demande en établissement, rectification, inscription d'une modération ou établissement d'un duplicata d'une fiche de retenue pour contribuables non résidents (modèle 164 NR F)

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Antrag auf Ausstellung, Berichtigung, Eintragung einer Ermäßigung oder Ausstellung eines Duplikates einer Steuerkarte für nicht ansässige Steuerpflichtige (Vordruck 164 NR D)

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Luxembourg Inland Revenue

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L-2982 Luxembourg
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