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Overtime tax credit (CIHS): a helping hand for cross-border workers
Your overtime is tax-free in Luxembourg but taxed back home? The CIHS makes up for it, up to €700 a year: who qualifies, how much, and how to claim.
Your overtime is tax-free in Luxembourg. And yet your country of residence can still tax it. Twice the effort, twice the tax: not exactly the deal you signed up for.
The overtime tax credit (crédit d'impôt heures supplémentaires, or CIHS) exists to fix precisely that. A small mechanism, a real difference on your tax bill.
Here's the plain-English version: what it is, who qualifies, how much it's worth, and how to claim it.
What is the CIHS?
The CIHS is a tax credit introduced in Luxembourg from the 2024 tax year (article 154terdecies of the income tax law).
In plain terms: it's a sum the Luxembourg state takes straight off the tax you owe, to make up for overtime that's taxed in your country of residence even though it isn't taxed here.
A tax credit isn't a deduction. A deduction lowers the income your tax is worked out on. A credit comes off the tax itself. And if it's bigger than the tax you owe, the difference can be refunded to you.
Why does this credit exist?
In Luxembourg, overtime is tax-free. Which makes sense: you're encouraged to do it, not handed a bill for it.
The snag is the border. Some countries of residence tax those same hours, even though Luxembourg exempts them. Germany is the obvious case: since a 2024 agreement, it can tax overtime worked in Luxembourg by German cross-border workers.
So for the worker caught in the middle: overtime that's tax-free on one side of the border, taxed on the other. The CIHS softens that double hit.
Who qualifies for the CIHS?
The CIHS is aimed at cross-border employees. To benefit, you need to tick several boxes:
- earn pay for overtime actually worked in Luxembourg;
- fall under Luxembourg taxation for that income;
- live in a country linked to Luxembourg by a double-taxation treaty that assigns the taxing right to Luxembourg;
- and actually be taxed on those hours in your country of residence.
Civil servants and public-sector staff, whether of the State or local authorities, are excluded.
In practice, the first in line are German cross-border workers, whose country of residence taxes these hours.
How much can you get?
The amount depends on your total gross overtime pay over the year.
- Under €1,200: no credit.
- Between €1,200 and €4,000: the credit is 25% of the part above €1,200.
- Above €4,000: the credit is capped at €700 a year.
A worked example
You earned €2,000 in overtime over the year.
Calculation: (€2,000 - €1,200) × 25% = €200 of tax credit.
Earned €5,000? You're over the cap: the credit is €700, the most you can get.
How do you claim the CIHS?
Here's the trap to avoid: the CIHS isn't granted automatically.
No claim, no credit
The CIHS has to be claimed, either in your annual tax return or through an annual adjustment (décompte annuel). Without a move on your part, the Luxembourg tax authority (Administration des contributions directes) won't apply it.
Once you've claimed it, the tax authority works out the amount you're entitled to. The credit comes off the tax you owe; if it's more than that, the difference can be refunded.
With taxx.lu
taxx.lu guides you to claim the CIHS in the right place on your return (form 100 or 163), so you don't have to hunt for the right box yourself.
In short
The CIHS is good news for cross-border workers who do overtime in Luxembourg. When those hours are tax-free here but taxed in your country of residence, the credit limits the damage, up to €700 a year.
The one rule to remember: you have to ask for it. Do that, and claim back what's yours.
Frequently asked questions
Is the CIHS automatic?
No. You have to claim it in your tax return or through an annual adjustment. No claim, no credit.
What's the maximum CIHS?
€700 a year. You hit that cap as soon as your gross overtime pay tops €4,000 over the year.
Do French and Belgian cross-border workers qualify?
The scheme is open to residents of any country whose treaty assigns the taxing right to Luxembourg and that actually taxes these hours. In practice, it's mainly German cross-border workers who are affected. For other countries, eligibility depends on the applicable treaty and whether those hours are really taxed in the country of residence: one to check case by case.
