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17. Special expenses

Special expenses include certain types of expenses and contributions that you can deduct from your taxable income in Luxembourg.

They include:

  • Interest on personal loans and debts
  • Insurance premiums
  • Retirement savings contracts (prévoyance-vieillesse)
  • Home savings plans (épargne-logement)

Each category has its own deduction limits, conditions, and deduction rules.

Insurance

Certain insurance premiums are tax-deductible, including policies taken out abroad.

This includes:

  • Car insurance (only liability and driver coverage)
  • Home insurance (only liability coverage)
  • Life insurance
  • Supplemental health insurance (DKV, CMCM…)
  • Accident insurance
  • Disability / old-age / work incapacity insurance
  • Mortgage balance insurance (single premium and annual premium)

Interest on personal loans and debts

Interest paid on certain types of debt can be deducted under special expenses.

Deductible interest includes:

  • Personal loan for car purchase
  • Loan for furniture purchase
  • Loan for other consumer goods
  • Credit card interest
  • Bank overdraft interest

Deduction limit for insurance and interest

Premiums for insurance and interest on personal loans are deductible up to 672€ per year.

This deduction limit can be increased for:

  • spouse/partner taxed jointly
  • each child in the household

Example:
A married couple with two children: 672€ × 4 = 2.688€
The family can therefore deduct up to 2.688€.

Retirement savings contracts (prévoyance-vieillesse)

Retirement savings contracts allow you to prepare for retirement while benefiting from a tax deduction.

Deduction limit for retirement savings

3.200 € per year per person, regardless of any children

Example:
A married couple with two children: 3.200€ × 2 = 6.400€
The family can therefore deduct up to 6.400€.

Home savings plans (épargne-logement)

Home savings plans are an incentivized form of savings for purchasing or constructing a property, offering a tax deduction.

Deduction limit for home savings

The deductible limit depends on the subscriber’s age:

  • From 18 to 41 years old (inclusive): 1.344€
  • Over 41 years old: 672€

The increase also applies in the calendar year of the 41st birthday.

The deductible limit can be increased for:

  • spouses/partners taxed jointly
  • each child for whom the taxpayer benefits from a tax moderation

Example:
A married couple, both aged 35, with two children, each opens a home savings contract: 1.344 × 4 = 5.376€
The family can therefore deduct up to 5.376€.

Donations to approved organizations

Donations to recognized and approved organizations are tax-deductible.

  • To be considered, the total annual donations must be at least 120€.
  • Donations can be made to associations, foundations, or recognized institutions.

Example:
A taxpayer makes a donation of 80€ to a recognized foundation and a donation of 60 € to an approved association. The total donations amount to 140€.
The taxpayer can therefore deduct 140€.

Minimum automatic deduction

If you have no special expenses or if the actual amount is lower, each taxpayer can automatically deduct 480€ per year. For a couple taxed jointly, this amount increases to 960€.

Deductibility conditions for foreign contracts

Insurance and interest on foreign loans

For insurance and interest on loans or debts taken out with foreign companies or banks, there is no issue of deductibility in Luxembourg.

The provider must simply issue a certificate clearly stating:

  • the amount of premiums or interest paid for the tax year
  • the type of insurance or loan/debt concerned

Retirement savings abroad

For a retirement savings contract taken out abroad to be deductible, it must:

  • Be specifically designed for retirement savings (article 111ter L.I.R.)
  • Accept only payments that are deductible within legal limits
  • Be offered by an authorized and approved provider
  • Provide an annual certificate confirming that the contract meets all legal conditions and indicating the amount of contributions made

Home savings abroad

  • French home savings plans (PEL) are not deductible.
  • For German or Belgian contracts, deductibility depends on the type of contract subscribed in the respective country.
Last updated: 08.09.2025

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