Extraordinary Charges: The Deduction Most People Don't Fully Understand
Luxembourg lets you deduct unavoidable personal expenses — but only if they exceed a threshold that most taxpayers never bother to calculate.
What Are Extraordinary Charges?
Under Article 127 of the LIR, extraordinary charges (charges extraordinaires) are inevitable expenses that significantly reduce your ability to pay tax. The law requires all four conditions to be met simultaneously:
- Extraordinary — Not normally borne by the majority of taxpayers in a comparable situation
- Unavoidable — You could not escape the expense for material, legal, or moral reasons
- Reduces your ability to pay — The expense significantly diminishes your financial capacity
- You must request it — The deduction is not automatic; you must claim it on your return
Key Takeaway
Many taxpayers leave money on the table simply because they don't claim extraordinary charges on their return. The ACD will never apply this deduction for you — you must request it yourself.
The Normal Burden Threshold
Here's the part most people miss: you can only deduct the portion of your extraordinary expenses that exceeds a percentage of your taxable income. This percentage — the "normal burden" (charge normale) — varies based on your income and number of children:
| Taxable Income (EUR) |
0 children |
1 child |
2 children |
3 children |
4 children |
5+ children |
| < 10,000 | 2% | 0% | 0% | 0% | 0% | 0% |
| 10,000 – 20,000 | 4% | 2% | 0% | 0% | 0% | 0% |
| 20,000 – 30,000 | 6% | 4% | 2% | 0% | 0% | 0% |
| 30,000 – 40,000 | 7% | 6% | 4% | 2% | 0% | 0% |
| 40,000 – 50,000 | 8% | 7% | 5% | 3% | 1% | 0% |
| 50,000 – 60,000 | 9% | 8% | 6% | 4% | 2% | 0% |
| > 60,000 | 10% | 9% | 7% | 5% | 3% | 1% |
Example Calculation
Your taxable incomeEUR 55,000
Family situationMarried, 2 children
Threshold percentage4%
Normal burden (55,000 x 4%)EUR 2,200
Your actual extraordinary costsEUR 8,000
Deductible amount (8,000 − 2,200)EUR 5,800
What Expenses Qualify?
- Unreimbursed medical and dental costs (not covered by CNS, mutual, or private insurance)
- Disability-related expenses
- Medically prescribed dietary costs (requires medical certificate)
- Funeral expenses (reasonable amounts)
- Divorce legal fees
- Criminal trial costs (only if acquitted)
- Maintenance of dependent relatives (when no other person can be held responsible)
- Childcare costs and domestic help (see dedicated articles below)
What Does NOT Qualify?
- School tuition, education, or vocational training of children
- Any costs reimbursed by health insurance (CNS, mutual, private)
- Gardening, drivers, or concierge staff
- Voluntary or discretionary expenses
- Professional or business expenses (covered by separate provisions)
Childcare Costs: How to Claim Your EUR 5,400 Deduction
If you're paying for crèche, foyer de jour, or a registered childminder, you may be able to deduct up to EUR 5,400 per year — without needing to exceed any threshold.
The Forfait Option: No Threshold Required
While most extraordinary charges require your expenses to exceed a percentage of your income (the "normal burden"), childcare costs have a special shortcut: the flat-rate (forfait) deduction of up to EUR 450/month or EUR 5,400/year. This is deducted directly from your taxable income with no threshold to exceed.
Important Limit
The forfait can never exceed the costs you actually incurred. If you paid EUR 3,000 in childcare for the year, your deduction is capped at EUR 3,000 — not EUR 5,400.
Who Qualifies?
- Child must be under 14 years old as of 1 January of the tax year
- Child must be part of your household
- Care provider must be officially approved/licensed
- Expenses must be evidenced by invoice
Which Providers Qualify?
The provider must be licensed by the Ministère de l'Éducation nationale, de l'Enfance et de la Jeunesse, or by the equivalent authority in another EU member state. Qualifying providers include:
- Crèches (daycare centres)
- Foyers de jour / Maisons relais (after-school care)
- Assistants parentaux (registered childminders)
- Garderies (supervised play centres)
- Approved facilities in another EU Member State (must be recognised by that state's competent authority)
What Does NOT Count as Childcare?
- School tuition or education fees
- School canteen fees
- Extracurricular activities (sports clubs, music lessons, art classes)
- Informal babysitting by an unlicensed individual
- Care by a non-licensed family member paid informally
- Children aged 14 or older
Chèque-Service Accueil (CSA) — Deduct Only What You Actually Paid
If your childcare costs are partially subsidised through the Chèque-Service Accueil system, you can only deduct the net amount you paid out of pocket — the portion after the CSA subsidy is subtracted.
Example: Crèche with CSA
Total crèche invoice for the yearEUR 7,200
CSA subsidy received− EUR 3,600
Your out-of-pocket costEUR 3,600
Your deduction (limited to actual cost)EUR 3,600
Where to Declare
Declare childcare costs on your Modèle 100 (annual income tax return), page 15, in the extraordinary charges section — specifically cases 1715–1723 for the forfait option.
Domestic Help: Yes, Your Cleaning Company Probably Counts
Whether you employ a housekeeper directly or use a professional cleaning service, up to EUR 5,400/year can be deducted — but only if you follow the rules.
Three Conditions (All Must Be Met)
Per the official ACD guidance, domestic help costs are deductible only when all three of these are satisfied:
- CCSS affiliation — The worker must be affiliated with the Centre Commun de la Sécurité Sociale (CCSS), either directly by you (if you are the employer) or by the cleaning company (if they employ the worker)
- Indoor domestic tasks — The worker must mainly carry out domestic tasks inside your private home (cleaning, ironing, interior maintenance)
- Proper employment — The worker must be hired directly by you as a salaried worker, or employed through a cleaning company acting as intermediary
Key Takeaway
Both direct employment (you are the employer) and cleaning company invoices (the company is the employer) qualify for this deduction. The common belief that only directly hired workers count is wrong — what matters is that the worker is declared to CCSS.
What Qualifies
- Indoor cleaning services (floors, bathrooms, kitchen)
- Ironing and laundry
- General interior home maintenance
- Services via a registered professional cleaning company
- Directly employed household staff (with employment contract and CCSS declaration)
What Does NOT Qualify
- Gardening — Lawn mowing, hedge trimming, landscaping (explicitly excluded)
- Drivers — Not domestic household tasks
- Concierge / doorman — Not interior domestic tasks
- Renovation or construction — Not routine maintenance
- Undeclared / cash-in-hand workers — No CCSS affiliation = no deduction
The Mixed Invoice Trap
If your cleaning company also does gardening or outdoor work and puts everything on one invoice, the ACD may reject the entire deduction. Always ensure invoices clearly separate indoor domestic work from outdoor/gardening work. This is one of the most common mistakes that triggers a tax adjustment.
Documentation You Need
You do not need to attach invoices when filing your return. However, the ACD can request them at any time during verification. Keep the following:
- Invoices with amounts, service descriptions, and dates
- Proof of payment — bank transfers preferred (cash is risky)
- If directly employed: employment contract and payslips
- If via a company: the company's invoices showing CCSS-registered workers
Where to Declare
Declare domestic help costs on your Modèle 100, page 15, cases 1715–1723 (forfait option), or claim actual costs in the extraordinary charges section.
The EUR 5,400 Shared Cap: The Rule That Catches Everyone Off Guard
Paying for both childcare and a cleaning company? You might assume you get EUR 5,400 for each. You don't.
The flat-rate (forfait) deduction of EUR 5,400/year covers three categories combined:
- Childcare costs (frais de garde d'enfant)
- Domestic help costs (frais de domesticité)
- Dependency care/assistance costs (frais d'aides et de soins)
The allowance is granted only once. You cannot claim EUR 5,400 for childcare plus another EUR 5,400 for domestic help. The total across all three categories is capped at EUR 5,400/year (EUR 450/month).
Example: Combined Costs
Childcare (crèche) costs for the yearEUR 4,000
Cleaning company costs for the yearEUR 3,000
Total qualifying costsEUR 7,000
Your forfait deduction (capped)EUR 5,400
Amount you cannot deduct via forfaitEUR 1,600
What Should You Do?
If your combined childcare + domestic help costs significantly exceed EUR 5,400, calculate the actual costs method as well. Depending on your income and family situation, claiming actual costs (minus the normal burden threshold) might give you a larger deduction. You are allowed to choose whichever method is more advantageous.
Forfait vs. Actual Costs: Which Method Saves You More?
Luxembourg gives you two ways to deduct extraordinary charges. Choosing the wrong one can cost you hundreds or even thousands of euros.
Method 1: Flat-Rate (Forfait)
- Deduct up to EUR 5,400/year (EUR 450/month)
- No need to exceed any threshold
- Only applies to childcare, domestic help, and dependency care
- Cannot exceed actual costs incurred
- Shared cap across all three categories
Method 2: Actual Costs (Normal Charge Method)
- No fixed cap on the deduction amount
- Must exceed the normal burden threshold (see table above)
- Applies to all types of extraordinary charges (medical, legal, childcare, etc.)
- Only the amount above the threshold is deductible
When the Forfait Wins
Scenario: High Income, Moderate Costs
Taxable incomeEUR 70,000
Family situationSingle, 1 child
Childcare + cleaning costsEUR 5,000
Forfait method:EUR 5,000
Threshold (9% × 70,000)EUR 6,300
Actual costs method: 5,000 − 6,300EUR 0
Winner: Forfait saves EUR 5,000
When Actual Costs Wins
Scenario: Family with High Combined Costs
Taxable incomeEUR 50,000
Family situationMarried, 3 children
Childcare + medical + domestic helpEUR 14,000
Forfait method: (only childcare/domestic)EUR 5,400
Threshold (4% × 50,000)EUR 2,000
Actual costs method: 14,000 − 2,000EUR 12,000
Winner: Actual costs saves EUR 12,000
Rule of Thumb
- High income + low costs → the threshold is high, actual costs may yield zero → use forfait
- Lower income + many children + high costs → the threshold is low and costs far exceed EUR 5,400 → use actual costs
- Always calculate both and choose the higher deduction — this is explicitly allowed
7 Tax Deduction Myths That Could Cost You Money
We verified each of these against Luxembourg statutes and official ACD guidance. Here's what the law actually says.
Myth #1
"I can deduct my gardening costs as domestic help."
Fact
No. The ACD explicitly excludes gardening, lawn mowing, hedge trimming, and all outdoor maintenance. Only expenses "strictly related to indoor housekeeping" qualify. (Source: Guichet.lu, ACD abat_forf_dom)
Myth #2
"I get EUR 5,400 for childcare AND EUR 5,400 for my cleaning lady."
Fact
No. The EUR 5,400 forfait is a shared cap covering childcare + domestic help + dependency care combined. One allowance, granted once. (Source: RGD 19 December 2008)
Myth #3
"Only directly employed housekeepers count. Cleaning company invoices don't."
Fact
Wrong. Both direct employment and cleaning companies qualify, as long as the worker is affiliated with CCSS (either by you or by the company). (Source: Guichet.lu extraordinary expenses guide)
Myth #4
"I can deduct my child's judo lessons / music school as childcare."
Fact
No. Only supervision and care services from approved providers qualify. Extracurricular activities, sports clubs, and music lessons are not childcare under the statute. (Source: taxx.lu, ACD guidance)
Myth #5
"I pay my cleaner in cash, so I can still claim the deduction."
Fact
Extremely risky. The worker must be affiliated with CCSS. Cash payments to undeclared workers do not qualify. Even for declared workers, the ACD expects "paid in a legal and traceable way" — bank transfers are strongly recommended. (Source: taxx.lu, ACD guidelines)
Myth #6
"I don't need to keep invoices since I don't attach them to the return."
Fact
Dangerous assumption. You don't attach invoices, but the ACD reserves the right to request them at any time during verification. No invoice = no deduction if audited. Keep all invoices with amounts, descriptions, and dates. (Source: Guichet.lu)
Myth #7
"All medical expenses are fully deductible."
Fact
Only partially. You can only deduct the portion not reimbursed by CNS, mutual insurance, or private insurance. And even then, only the amount exceeding your normal burden threshold. Note: medical costs are always subject to this threshold — the flat-rate forfait (up to EUR 5,400) only applies to childcare, domestic help, and dependency care, not to medical expenses. (Source: Art. 127 LIR)
Employment-Related Deductions: Are You Claiming More Than Just the Minimum?
Every employee in Luxembourg automatically gets a EUR 540 deduction — but your actual work-related expenses might be worth far more.
The Automatic Lump-Sum: EUR 540/Year
Under Art. 105 LIR, every salaried employee receives a minimum flat-rate deduction (forfait pour frais d'obtention, or FFO) of EUR 540 per year (EUR 45/month). This is already built into your employer's monthly withholding tax calculation — you don't need to do anything to claim it.
However, if your actual documented work-related expenses exceed EUR 540, you may deduct the higher real amount instead. There is no upper cap on actual expenses, but every euro must be documented and justified.
Key Takeaway
The EUR 540 forfait is a floor, not a ceiling. If you have significant professional expenses — tools, training, home office — calculate your real costs. You might be leaving hundreds or thousands of euros on the table.
Travel Deduction: Distance Home to Work
On top of the EUR 540 FFO, you get a separate travel deduction (frais de déplacement) based on the straight-line distance between your commune of residence and your commune of work. Key rules:
| Rule |
Detail |
| Rate | EUR 99 per distance unit per year |
| Distance measured | Straight-line (vol d'oiseau), one-way, between commune centres |
| First 4 units | Excluded (not deductible since 1 Jan 2013) |
| Maximum | 26 distance units = EUR 2,574/year |
| Transport mode | Irrelevant — car, bus, bike, or walk all get the same rate |
Example: Travel Deduction
Straight-line distance (one way)18 km (18 units)
First 4 units excluded− 4 units
Deductible units14 units
Annual travel deduction (14 × EUR 99)EUR 1,386
Important for Cross-Border Workers (Frontaliers)
If you live outside Luxembourg, the distance is calculated in two segments: (1) from your foreign commune to the Luxembourg border entry point, plus (2) from that border commune to your workplace commune. The same EUR 99/unit rate and 26-unit cap apply.
What Actual Expenses Can You Claim?
If your real costs exceed the EUR 540 forfait, you can claim actual expenses instead. Qualifying categories include:
- Work tools and instruments — Items used at least 90% professionally. Under EUR 870: fully deductible in the year of purchase. Over EUR 870: must be depreciated (e.g., computers over 3 years)
- Work-specific clothing — Uniforms, safety gear, specialised professional clothing (not ordinary suits or shoes). Cleaning costs of work clothing also qualify
- Professional training — Courses directly related to your current occupation (not career-change retraining)
- Professional books and publications — Specialised literature relevant to your current job
- Union dues and professional chamber fees
- Professional relocation costs — Moving expenses when relocating for work
- Home office — Rent, energy, internet for a dedicated workspace used 90%+ exclusively for professional purposes
- Double household — Costs of maintaining a second residence near the workplace, if professionally necessary
What Does NOT Qualify
- Ordinary clothing — Regular suits, shoes, even if worn to work
- General education — Degrees or courses not directly related to your current job, or career retraining
- Mixed-use items below 90% professional use — If a computer or phone is used less than 90% for work and the split cannot be objectively proven, the entire expense is rejected (not even the professional portion)
- Actual commuting costs — You cannot claim fuel or car costs for commuting; only the flat-rate travel deduction applies
- General reference materials — Encyclopedias, dictionaries, general newspapers
- Private living expenses — Explicitly excluded under Art. 12 LIR
Quick Reference: Caps and Limits
| Item |
Amount / Limit |
| FFO lump-sum (automatic) | EUR 540/year |
| Travel deduction rate | EUR 99 per distance unit/year |
| Travel deduction maximum | EUR 2,574/year (26 units) |
| Immediate deduction threshold for tools | EUR 870 (below = full deduction; above = depreciate) |
| Professional use threshold | 90% minimum for mixed-use items |
| Actual expenses | No upper cap (must be documented) |
Where to Declare
If you only claim the EUR 540 forfait and standard travel deduction, no action is needed — these are applied automatically via your withholding tax. To claim actual expenses exceeding the forfait, declare them on your Modèle 100 (annual income tax return) with supporting documentation (receipts, invoices, certificates).
Special Expenses: Insurance, Retirement Savings, Donations & More
From insurance premiums to retirement savings to charitable donations — here's every special expense deduction you're entitled to, with the exact caps.
The Automatic Lump-Sum
Every taxpayer receives a minimum flat-rate deduction (forfait pour dépenses spéciales, or FDS) that is applied automatically through your withholding tax — no filing required:
| Tax Class |
Annual Lump-Sum |
| Class 1 or 1a (single) | EUR 480 |
| Class 2 (jointly taxed couple) | EUR 960 (2 × 480) |
If your actual documented special expenses exceed this amount, the higher real amount is deducted instead. The forfait is a floor that covers all Art. 109–112 categories combined.
Category 1: Social Security Contributions (Art. 110) — No Cap
Mandatory social security contributions deducted from your salary are fully deductible without any ceiling. This includes:
- Employee health, pension, and long-term care insurance contributions
- Voluntary social insurance contributions
- Contributions to buy back missing insurance periods
Additionally, personal contributions to an employer-established complementary pension scheme are deductible up to EUR 1,200/year.
Category 2: Insurance Premiums & Personal Loan Interest (Art. 111)
These two sub-categories share a combined annual ceiling of EUR 672 per person in the tax household:
Qualifying insurance premiums:
- Life insurance (minimum 10-year contract required)
- Supplementary health/sickness insurance
- Accident insurance
- Disability / invalidity insurance
- Third-party liability insurance (RC / responsabilité civile)
- Car insurance (liability and driver coverage only)
- Mortgage balance insurance / assurance solde restant dû (SRD) — annual premiums
- Mutual aid society (mutualité) contributions
Qualifying debit interest:
- Personal / consumer loan interest
- Car loan interest
- Credit card interest
- Bank overdraft interest
Cap Calculation (EUR 672 per person)
Single taxpayerEUR 672
+ jointly taxed spouse/partner+ EUR 672
+ each qualifying child+ EUR 672 per child
Example: couple with 2 childrenEUR 2,688
What Does NOT Count
Comprehensive/casco car insurance does not qualify — only liability and driver coverage. Life insurance contracts with a duration under 10 years are also excluded. Mortgage interest on your home is a separate deduction under Art. 98bis (see the Housing Costs article below).
Category 3: Retirement Savings / Prévoyance-Vieillesse (Art. 111bis)
Contributions to a qualifying private pension plan are deductible up to:
| Tax Year |
Annual Cap Per Person |
| 2025 | EUR 3,200 |
| 2026 onwards | EUR 4,500 |
For a jointly taxed couple, each spouse can claim their own cap, so the household maximum is EUR 6,400 for 2025.
The contract must meet strict conditions:
- Minimum duration: 10 years
- Benefits payable no earlier than age 60 and no later than age 75
- Policyholder, insured, and beneficiary at maturity must be the same person
- Provider must be established in Luxembourg or another EU member state
- No early withdrawal (except serious illness or invalidity)
Key Takeaway
If you're not contributing to a prévoyance-vieillesse plan, you're missing out on up to EUR 3,200 in annual deductions (EUR 4,500 from 2026). At a marginal tax rate of 40%, that's a tax saving of up to EUR 1,280/year just for saving for retirement.
Category 4: Building Society Contributions / Épargne-Logement (Art. 111)
Contributions to approved housing savings schemes (Bausparkassen) for your personal residence are deductible with age-based caps:
| Age (on 1 January of tax year) |
Annual Cap Per Person |
| 18 to 40 years old | EUR 1,344 |
| 41 and over | EUR 672 |
The cap is increased by the same amount for a jointly taxed spouse and each qualifying child. Example: couple both under 40 with 2 children = EUR 1,344 × 4 = EUR 5,376.
Category 5: Charitable Donations (Art. 109)
- Minimum: Total annual donations must reach at least EUR 120
- Maximum: The lesser of 20% of total net taxable income or EUR 1,000,000
- Excess amounts can be carried forward to the following 2 tax years
- Only cash donations to organisations recognised as being of utilité publique qualify
Category 6: Alimony Payments (Art. 109)
Alimony to a divorced spouse (from court order, post-31/12/1997) is deductible up to EUR 24,000 per year per divorced spouse. The recipient must declare this as taxable income.
What Does NOT Qualify as Special Expenses
- Mortgage interest on your home (separate Art. 98bis deduction)
- Life insurance contracts under 10 years
- Comprehensive/casco car insurance
- School tuition fees (these are a separate, small tax credit)
- Notary fees for property purchase
- Construction or renovation costs
- French PEL or Belgian housing savings equivalents
- Contributions to non-approved foreign pension schemes
Where to Declare
Special expenses are declared on pages 13–16 of the Modèle 100 (annual income tax return). Social security contributions go in cases 1601–1608. Supporting documents (insurance certificates, bank statements) must be available on request. Filing deadline for tax year 2025: 31 December 2026.
Mortgage Interest Deduction: How Much Can You Actually Deduct?
If you own your home in Luxembourg (or abroad) and have a mortgage, you can deduct the interest — but the cap depends on when you moved in and the size of your household.
What Qualifies
Under Art. 98bis LIR, you can deduct mortgage interest (intérêts débiteurs) on loans taken to acquire or build your principal residence. The property may be located in Luxembourg or abroad. In the year of acquisition, notary fees for the loan agreement and bank commission fees are also deductible.
Key Takeaway
Since the 2023 reform, properties that became available after 31 December 2023 enjoy unlimited mortgage interest deduction — no cap at all. If you bought or built recently, this is a significant benefit.
The Cap Structure (Reformed in 2023)
The law of 22 December 2023 replaced the old "years of occupancy" approach with a system based on when the property became available. For the 2025 tax return:
| Date Property Became Available |
Annual Cap Per Person |
| After 31/12/2023 | No cap — full deduction |
| 01/01/2020 – 31/12/2023 | EUR 4,000 |
| 01/01/2015 – 31/12/2019 | EUR 3,000 |
| Before 01/01/2015 | EUR 2,000 |
The Household Multiplier
The cap is multiplied by the number of persons in your fiscal household:
- 1× for the taxpayer
- +1× for the spouse/partner (if jointly taxed — Class 2)
- +1× for each child giving rise to tax relief
Example: Property Available in 2021
Family situationMarried, 2 children
Cap per personEUR 4,000
Household members4 persons
Mortgage interest paid in 2025EUR 18,000
Maximum deductible (4 × EUR 4,000)EUR 16,000
Non-deductible portionEUR 2,000
Example: Property Available in 2024 (Post-Reform)
Family situationMarried, 2 children
Mortgage interest paid in 2025EUR 22,000
Deductible amount (no cap)EUR 22,000
What Counts as "Date of Availability"?
- Off-plan (VEFA) purchases: Date of handover / key delivery (construction completion)
- Existing homes (immediately habitable): Purchase date
- Homes requiring major renovation: Date when essential facilities (heating, sanitary, kitchen) are installed and the property becomes habitable
What Does NOT Qualify
- Investment / rental property — Interest on rented-out property follows different rules (fully deductible against rental income, but not under Art. 98bis)
- Secondary or holiday homes — Not your principal residence
- Non-residents who have not elected tax assimilation (assimilation fiscale)
- Interest already offset by employer or government subsidies
Don't Confuse This with the Bëllegen Akt
The Bëllegen Akt is a separate and cumulative benefit — a tax credit of up to EUR 40,000 per buyer (increased from EUR 30,000 in 2025) that offsets registration duties on the purchase deed. It does not replace or reduce your mortgage interest deduction. You can claim both simultaneously.
Where to Declare
Declare mortgage interest on your Modèle 100, page 10 (Revenu net provenant de la location de biens), boxes 1033–1061. You will need to provide: the bank name, loan amount, economic purpose of the debt, interest paid during the year, and any subsidies received. Attach your bank's annual certificate (attestation annuelle).