Luxembourg

The following three 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 2,505 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 70.00. Between EUR 3,000 and EUR 3,600, the amount of the CISSM is degressive and is calculated as follows: 70/600 x (3,600 - gross monthly salary) EUR per month.

The tax credit for minimum wage earners of EUR 70 per month currently only applies to employees earning a monthly gross wage of between EUR 1,800 and EUR 3,600. 

On 23 May 2023, the Luxembourg government submitted Draft Law n°8388 to the Parliament, introducing several amendments aiming to address some recent jurisprudential developments, to clarify some technical aspects of the tax law, and to simplify and digitalise some administrative procedures. One of the amendments proposed by the draft law relates to the introduction of a new scale tax credit (credit d'impôt barème) for the 2024 tax year to compensate potential loss of professional income for certain taxpayers due to the end of the temporary tax credit (crédit d'impôt conjoncture).

Following the abolishment of the temporary tax credit (crédit d'impôt conjoncture) introduced in 2023, certain taxpayers subject to tax class 1a and 2 may face negative financial consequences. Therefore, a new tax credit is introduced for the 2024 tax year for taxpayers subject to the same tax class 1a or 2 for 2023 and 2024 and earning professional income (as defined in article 2 LITL) for each of these taxpayers taxable in Luxembourg. Conditions to benefit from the scale tax credit vary depending on the personal/marital situation of the taxpayers. The tax credit amounts to EUR 108.