10. Income from salaries

Taxable employment income

Salaries earned in Luxembourg are generally subject to income tax. This includes not only the base salary, but also bonuses, premiums, 13th month, benefits in kind, and other allowances (unemployment, sickness, parental leave).

Important information!

All employment income must be declared even if the employment contract started during the year.

Annual salary certificate

What is a salary certificate?

The salary certificate is an official document issued by the employer at the beginning of the following year. It summarizes the essential information related to your remuneration for the previous year, including:

gross salaries received,
social security contributions and tax withholdings,
allowances and various benefits,
deductions applied

The certificate provides the annual values of all these elements, giving a complete overview of your salary situation over the year. It is essential to complete your tax return.

Where to obtain it?

For private-sector employees: From your employer's HR department.
Other sources and administrations: You may also receive salary certificates or income statements from organizations such as the Agency for Employment Development (ADEM), the National Health Fund (CNS), the Fund for the Future of Children (CAE), or other administrations depending on the type of income (sickness, maternity, etc.).
For state civil servants: Directly via MyGuichet.lu.

Possible salary-related deductions

Commuting expenses

Commuting expenses between your home and workplace can be partially deducted from your taxable income only as a flat-rate allowance.

Other expenses, such as actual spending on fuel or public transport, are not deductible.

Flat-rate calculation:
To calculate the flat-rate commuting allowance, the distance is measured in distance units:

1 unit = 99€ per year
Distance is measured as the straight-line distance between the municipalities of residence and the workplace(s), regardless of transportation method.

Non-resident taxpayers

Distance is calculated analogously between the main town of the municipality of residence (Germany, Belgium, France) and the point of entry into Luxembourg.
Added to this is the distance between the main town of entry and the workplace.

Changes during the year

If, between January 1 and December 31, a change of residence or workplace increases the distance units, this increase takes effect from the beginning of the month of the change.
A decrease in units during the year has no effect for that year.

Spouse allowance (“AC”)

The spouse allowance, or “AC”, is a tax reduction applied to the withholding tax on salaries for married or civil union couples.

It applies when both spouses work and each income is taxable. The allowance is granted to the spouse with the lower salary, via an “AC” code on their tax withholding statement.

Allowance amount
The annual “spouse allowance” includes:

Flat rate for acquisition costs: 540€
Flat rate for special expenses: 480€
Extra-professional allowance: 4.500€

Total spouse allowance per year: 5.520€

Extra-professional allowance

The extra-professional allowance is a tax reduction granted to married or civil union couples taxed jointly, when both spouses or partners earn professional income.

Who can benefit?

Both spouses must work professionally (employee, commercial, agricultural, forestry, or liberal profession) and be personally affiliated with a social security scheme.

On request, the allowance can also be granted if one spouse receives a pension for less than 3 years at the beginning of the tax year and the other works professionally.

Allowance amount

Annual: 4.500€
Monthly: 375€ per full month of tax liability

This allowance directly reduces taxable income and lowers the tax due for the couple.

Taxx.lu advantage

On taxx.lu, we automatically determine if your couple meets the conditions for the extra-professional allowance. If applicable, it is taken into account directly in your tax calculation, without further action on your part.

Acquisition costs

Professional expenses related to your employment (training, equipment, etc.)

Acquisition costs are professional expenses directly linked to your employment. Their purpose is to acquire, maintain, or secure taxable income.

Each employee automatically benefits from an annual flat-rate of 540€ (i.e., 45€ per month), without providing receipts. However, if your actual expenses exceed this amount, it may be more advantageous to declare actual expenses.

When to declare actual expenses?

As soon as your actual expenses exceed the flat-rate of 540€ per year, it is beneficial to complete the corresponding section in your declaration to benefit from a higher deduction than the automatically applied flat rate.

Important information

If your expenses are less than or equal to 540€, there is no need to detail them; the 540€ flat rate can be indicated.

Which expenses can be deducted?

Expenses must be used almost exclusively for professional purposes (minimum 90%).

Approved categories by the tax administration include:

Contributions to professional chambers or unions
Professional books, journals, or periodicals
Typically professional clothing (e.g., lab coats, helmets, safety shoes)
Work instruments (e.g., computer, specific tools)
Continuing education related to your profession

Non-deductible expenses

Certain expenses are not considered acquisition costs, even if indirectly related to professional activity:

Regular clothing (suits, dresses, ordinary shoes) because they can be worn privately
Initial training or retraining for another activity, as it does not improve the current profession
Mixed-use expenses not meeting the 90% professional rule
Generally, any private lifestyle expense (e.g., leisure, sports, wellness)

Attention!

Expenses declared must be supported by receipts (invoices, payment proofs, etc.). The tax administration is not obliged to automatically accept these expenses; it may audit, request additional details, and reject them if legal conditions are not met.