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Who is eligible for tax allowances?

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Tax allowances are granted to Luxembourg residents and to “equivalent” non-residents. Cross-border workers earning most of their income in the Grand Duchy of Luxembourg can ask to be treated as residents or equivalent residents for tax purposes, to be subject to the same tax regime and to be eligible for any allowances.

To do so, a French or German non-resident must earn at least 90% of their total income in Luxembourg. This threshold can be calculated on the basis of each spouse’s or partner’s individual situation or on the basis of the overall situation of the household. Non-resident Belgians can opt for resident equivalence provided that more than 50% of the household’s professional income is taxable in Luxembourg.

 

OptiPension+: a comprehensive, flexible pension insurance solution

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Are you planning to stay active and make the most of life after retirement? Do you want to jump into this new stage of life without having to make any compromises? Developed by Cardif Lux Vie*, the OptiPension+ pension insurance solution helps you prepare for retirement while benefiting from substantial tax allowances.

A tailor-made policy

OptiPension+ is both a personalised savings scheme and pension insurance: 

  • Decide on the amount of premiums and how often you pay them,
  • Invest all or part of your savings in a guaranteed interest fund, plus any potential profit sharing,
  • Manage your investment strategy on your own terms, choosing from an optimised selection of funds depending on your goals and in accordance with statutory terms and conditions,
  • You can access your savings from the age of 60, however you may choose to extend the policy until you turn 75,
  • At the end of the policy, you can choose to redeem all or part of your savings in the form of a monthly annuity. 

A substantial tax benefit

As a Luxembourg tax resident or equivalent, the annual tax ceiling is €3,200 per person.

To be tax-deductible, the policy must be taken out for at least 10 years and must not mature before you reach the age of 60.

Maximum deductible amounts for pension insurance (OptiPension+)

Discover Optipension+

OptiSave: combining savings and life insurance

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Are you looking to build up savings for a trip around the world, to buy a home or to achieve a long-term goal? The OptiSave life insurance policy by Cardif Lux Vie* enables you to reach your savings goals while helping you safeguard your future, protect your loved ones and take advantage of tax allowances.

Regular, scheduled saving

  • When signing up to the policy, you define the transfer amount and frequency,
  • You can change your payment plan at any time,
  • Invest your premiums in the fund of your choosing, according to your risk profile and objectives,
  • For maximum security, you can opt for the guaranteed minimum rate option. 

Tax-deductible life insurance

Think of your loved ones by choosing from a range of supplementary guarantees. These guarantees make it possible to construct a truly personalised insurance policy.  

In addition, any premiums paid under the policy are tax-deductible up to €672 per person belonging to the tax household and per annum, provided the policy is held for at least 10 years and subject to compliance with the terms and conditions set out in Article 111 of the Luxembourg Income Tax Law (LIR). This ceiling applies for all eligible insurance policies and debit interest.

Maximum deductible amounts for interest and life insurance
Family situation Single Married or in a civil partnership
Taxpayer EUR 672 EUR 1.344
Taxpayer + 1 child EUR 1.344 EUR 2.016
Taxpayer + 2 children EUR 2.016 EUR 2.688
Taxpayer + 3 children EUR 2.688 EUR 3.360
Per child + EUR 672 + EUR 672

Discover OptiSave

OptiKids: protect your child’s future

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Do you want the best for your child, grandchild or godchild? Do you want to support them financially when they need it most? The OptiKids life insurance policy by Cardif Lux Vie* can be taken out by parents and relatives, helping you gradually build up capital while benefiting from a range of benefits.

Flexibility and security

  • First, you set up a savings target, or a premium amount and frequency,
  • You set the policy term,
  • At any time, you can choose to extend the policy until the child turns 25 or 30, depending on when they need to access the capital saved,
  • Premiums are capitalised with a minimum guaranteed rate, plus any profit sharing: you know in advance the minimum capital amount your child will receive at policy-end,
  • The policy includes a basic guarantee ensuring it continues in the event of the insured’s death, which you can supplement with other guarantees, depending on your needs,
  • The beneficiary may be changed during the policy.

Tax benefits 

You can deduct up to €672 of the premiums you pay into the policy for each member of the tax household. This applies provided that the policy is effectively held for a minimum of 10 years, and subject to compliance with the other terms and conditions set out in Article 111 of the Luxembourg Income Tax Law (LIR).

Discover OptiKids

Schwäbisch Hall home savings scheme: finance your home

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Are you planning to buy an apartment or a plot of land, build your own home or renovate your current place? Whether you want to get a foot on the property ladder or finance your real estate projects, the Schwäbisch Hall home savings scheme helps you save while also offering tax benefits.

Your savings grow at a fixed rate defined at the outset, protecting you against market fluctuations.

Tax benefits of the Schwäbisch Hall home savings scheme

To make the most of tax benefits, the policy must be taken out for a minimum 10-year term (except in the event of disability or death).


To be able to keep the tax benefit acquired at maturity, the savings must be used to finance projects relating to your primary residence.

Allowances are granted depending on the age of the youngest taxpayer in the tax household at the start of the tax year.

Good to know: The savings may be used for anything related to your primary residence: early partial repayment of your home loan, solar panel installation, boiler replacement, adding an extension to your home, renovating the façade, etc.

 

Maximum deductible amounts for home savings
Age Single Married or in a civil partnership Per child
18 to 40 (inclusive) EUR 1.344 EUR 2.688 + EUR 1.344
41 and over EUR 672 EUR 1.344 + EUR 672

Find out more

Other tax allowance possibilities

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Credit protection insurance

If you took out insurance alongside your mortgage or consumer loan, the premiums paid are tax-deductible up to €672 per person in the tax household, for Luxembourg and equivalent tax residents. This ceiling applies for all eligible insurance policies and debit interest.

Maximum deductible amounts for interest and life insurance

Family situation Single Married or in a civil partnership
Taxpayer EUR 672 EUR 1.344
Taxpayer + 1 child EUR 1.344 EUR 2.016
Taxpayer + 2 children EUR 2.016 EUR 2.688
Taxpayer + 3 children EUR 2.688 EUR 3.360
Per child + EUR 672 + EUR 672

In addition, if you want to cover your personal mortgage loan with single-premium mortgage protection insurance, the deductible limits are higher:

  • Up to the age of 30, an extra EUR 6,000 is added, plus EUR 1,200 per dependent child,
  • Over the age of 30, and in some cases, a supplement is added for each year in age (i.e. a maximum allowance of EUR 15,600 over the age of 50 for a childless taxpayer)
Family situation Up to 30 31 to 49 50 and over
Taxpayer EUR 6.000 EUR 480/year EUR 15.600
Taxpayer + 1 child EUR 7.200 EUR 576/year EUR 18.720
Taxpayer + 2 children EUR 8.400 EUR 672/year EUR 21.840
Taxpayer EUR 768/year EUR 24.960

Deductible limits for multiple premiums and debit interest

Interest refers to the bank fees charged in the event of a negative balance on a current account, personal loan or mortgage, lasting for one or more days.

This interest may be subject to tax allowances.

Consumer debit interest

You can deduct interest on current accounts and credit cards, as well as on personal and consumer loans (e.g. Réserve Privilège).

Given that consumer loans are covered by the same article as life insurance (Article 109 of the LIR), the maximum deductible amount is €672 per person in the household. This ceiling applies for all eligible insurance policies and debit interest.

 

Maximum deductible amounts for interest and life insurance

Family situation Single Married or in a civil partnership
Taxpayer EUR 672 EUR 1.344
Taxpayer + 1 child EUR 1.344 EUR 2.016
Taxpayer + 2 children EUR 2.016 EUR 2.688
Taxpayer + 3 children EUR 2.688 EUR 3.360
Per child + EUR 672 + EUR 672

Mortgage interest

Regarding your primary residence, tax allowances may range between €1,000 and €2,000 per annum and per person in the household, and according to the date of occupancy.

Occupancy period Deductible Amount per policyholder and er annum
1 to 5 years EUR 2.000
6 to 10 years EUR 1.500
More than 10 years EUR 1.000

However, debit interest on a secondary residence is not generally deductible.

In the case of financing property intended for rent, all interest expenses are tax-deductible as acquisition costs.

Discover credit protection insurance

* This product from Cardif Lux Vie is distributed by its insurance agency BGL BNP Paribas

Frequently asked questions about tax deductions in Luxembourg

  • icone faq question Who can take advantage of tax deductions in Luxembourg?

    Any Luxembourg resident or equivalent resident (subject to conditions) may take advantage of tax benefits, provided that they pay tax in Luxembourg. The maximum amount of tax relief a taxpayer may claim depends on a number of factors, including their age and the make-up of their household.

  • icone faq question Can I take out a life insurance policy for my child?

    You can take out an OptiKids life insurance policy for a child. Upon maturity of the policy, if the policyholder is still alive, your child will receive the capital amount. In the event of the policyholder’s death or disability, the benefits provided for in the contract will be paid by the insurance company.

  • icone faq question How do I decide which tax product to choose?

    Depending on your goals and savings capacity, you’ll find the product best suited to your stage in life among our range of solutions. Please feel free to discuss this with one of our advisors.

  • icone faq question Can I subscribe to more than one product at a time?

    The tax products outlined in this guide offer different and sometimes complementary benefits. You can therefore sign up to multiple products, whether at the same time or consecutively, depending on your saving capacities. Remember though that there is a cap on tax deductions.

  • icone faq question Is it possible to save amounts in excess of deductible limits?

    Yes. All of the premiums paid will be valued according to the terms of the policy, while tax deductions will apply to capped amounts.

Products from Cardif Lux Vie are distributed by BGL BNP Paribas, Cardif Lux Vie’s insurance agency, entered in the register of insurance intermediaries under number 1996AC001. Tax deductibility varies based on the personal situation of each client and is subject to change.