Question 1

What tax deductions are available in Luxembourg?

Accepted Answer

Luxembourg residents can deduct 2nd pillar pension contributions (up to €1,200/year), 3rd pillar private pension contributions (up to €4,500/year from 2026), insurance premiums (up to €672/person), home savings contracts — Bausparvertrag — (up to €1,344/person aged 18–40, €672 otherwise), and transport costs based on distance to work. Each deduction directly reduces your taxable income.

Question 2

How much can I save in tax with a private pension in Luxembourg?

Accepted Answer

3rd pillar pension contributions (Article 111bis) are deductible up to €4,500 per year from 2026. At a 30% marginal tax rate, that is up to €1,350 saved per year. The Tax Deductions Planner shows your exact saving based on your gross salary and tax class.

Question 3

What is a Bausparvertrag and how does it reduce tax in Luxembourg?

Accepted Answer

A Bausparvertrag is a home savings contract. Contributions are tax-deductible up to €1,344/year per person aged 18–40 (€672 outside that age range), plus an additional €672 per eligible child. It is one of the most accessible tax deductions for residents not yet contributing to a private pension.

Question 4

Can couples file taxes jointly in Luxembourg?

Accepted Answer

Yes. Married couples and civil partners in Tax Class 2 are taxed jointly via income splitting: combined income is halved, taxed, then doubled. This is most beneficial when there is a significant income difference between partners. The Tax Deductions Planner models both individual and joint scenarios.

Question 5

How does distance to work affect my tax in Luxembourg?

Accepted Answer

Luxembourg allows a transport deduction based on your one-way distance to work. The deduction increases with distance, up to a maximum of 30 km. It reduces your taxable income but does not affect social security contributions.

Tax Deductions Planner

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