Posted on 10 May 2022
CHILDREN: Who's household should they be part of?
The question of who’s household should children be part of, arises when two parents are not married or in a civil union, or when they are divorced. Now, what are the tax benefits and limitations?
1. What are the confusing circumstances?
When both parents of the child live together and are married and/or in a civil union, things are simple. However, certain circumstances may raise doubts. For example:
- When a couple lives in cohabitation, i.e. they are neither married nor in a civil union
- During a divorce: alternating or exclusive custody
2. What are the regulations and benefits?
The parent entitled to claim the child as part of his/her taxable household is the person who receives the family allowance in Luxembourg.
For the parent who receives the family allowance:
They can therefore add the child(ren) to their taxable household and thus trigger additional deduction limits for, among other things, special expenses or interests on a mortgage.
However, it will not be possible for this parent to deduct any maintenance paid in relation to a divorce.
For the parent who does not receive family allowance:
They can't add the child(ren) to their taxable household and thus benefit from the additional deduction limits.
However, if the parent does not live with the mother/father of the child then he/she can deduct the maintenance paid in case of divorce, to a maximum of 4020 euros per year and per child.
