Luxembourg

Three main tax credits are available:

• Employee tax credit varies between EUR 0 and EUR 600 depending on the level of income.
• Pensioner tax credit varies between EUR 0 and EUR 600 depending on the level of income.
• Single parent tax credit varies between EUR 750 and EUR 3,504 depending on the level of income.

Each of these credits may give rise to a tax refund even where the final taxes are lower than the credit itself.

The Budget Law for 2019 introduced the CISSM (Crédit d'impôt salaire social minimum), which applies to employees and apprentices when their salary is between EUR 1,800 and EUR 3,000. The amount of the CISSM varies according to the gross salary. Between EUR 1,800 and EUR 3,000, the amount of the CISSM is EUR 81.00. Between EUR 3,000 and EUR 3,600, the amount of the CISSM is degressive and is calculated as follows: 81/600 x (3,600 - gross monthly salary) EUR per month.

The tax credit for minimum wage earners of EUR 81 per month currently only applies to employees earning a monthly gross wage of between EUR 1,800 and EUR 3,600. 

In addition, A tax credit for overtime hours (“CIHS”) may be granted to any taxpayer who:

• Receives income from salaried employment taxable in Luxembourg;
• Is neither a civil servant, state employee, or trainee civil servant;and
• Receives income for overtime hours exempt from tax under Article 115, number 11, first indent of the Luxembourg income tax law.

For gross annual earnings not exceeding 1,200 euros, the CIHS is not granted. For gross annual earnings between 1,200 euros and 4,000 euros, the CIHS amounts to [(gross earnings – 1,200) x 25%] euros per year. For gross annual earnings exceeding 4,000 euros, the CIHS is set at 700 euros per year. The total amount of gross annual earnings to be considered should be rounded up to the next whole euro. The annual CIHS amount is rounded up to the next cent (0.01 euro) but may not exceed 700 euros.