The Luxembourg tax deductions cross-border workers can (and should) claim

Cross-border worker in Luxembourg? Tax assimilation unlocks deductions worth thousands. Find out what you can claim and how taxx.lu makes it easy.

Over 200,000 people cross the border into Luxembourg to work every day. From Metz, Trier, Arlon, and everywhere in between. If you're one of them, here's something you need to hear: you can claim most of the same tax deductions as a Luxembourg resident.

Private pension plans. Insurance premiums. Mortgage interest. Childcare costs. The lot.

But there's one condition that unlocks it all. And if you don't know about it, you could be leaving thousands of euros on the table every year.

The magic word: tax assimilation

By default, as a non-resident worker, you can't claim most deductions on your Luxembourg tax return. You're taxed on your Luxembourg income only, in tax class 1, with no extras.

That changes if you qualify for tax assimilation. This is a mechanism that treats you as a Luxembourg resident for tax purposes. Once you're assimilated, you get access to the same deductions as someone living in Luxembourg.

To qualify, you need to meet at least one of these three conditions:

1. At least 90% of your household income comes from Luxembourg. For this calculation, the first 50 days of home office count as Luxembourg days and don't work against you.
2. Your household earns less than €13,000 net per year from outside Luxembourg.
3. For Belgian residents only: more than 50% of your household's professional income is earned in Luxembourg.

These conditions are not cumulative. One is enough. And for married or civil-partnered couples, only one of the two partners needs to meet a condition for the whole household to qualify.

What can you actually deduct?

Once you're assimilated, you unlock the same deductions as a resident. Here's what that means in practice.

Private pension plan (art. 111bis)

Up to €4,500 per taxpayer per year (since January 2026). This is one of the biggest single deductions available. At a 35% marginal rate, that's €1,575 back in your pocket. For a couple, double it.

Insurance premiums

Car insurance (civil liability part), home insurance (liability portion), private health care, life insurance: deductible up to a combined ceiling of €672 per person in the household. Yes, even if those policies are with insurers in your country of residence.

Mortgage interest on your main residence

You can deduct the interest on your mortgage, even if your home is in France, Belgium, or Germany. The limits depend on the date of availability of the property:

Date of availability	Deductible limit per person per year
After 31/12/2023	Full deduction (no cap)
Between 01/01/2020 and 31/12/2023	€4,000
Between 01/01/2015 and 31/12/2019	€3,000
Before 01/01/2015	€2,000

One important difference for cross-border workers: if your property is abroad, the deduction adjusts your overall tax rate rather than directly reducing your taxable income. The result is still a lower tax bill, but the mechanism works slightly differently than for a Luxembourg property.

Home savings plans

Contributions to a qualifying home savings plan are deductible up to €672 per household member, or €1,344 if the youngest taxpayer is under 40.

Interest on personal loans

Student loans, car loans, consumer credit: deductible up to €672 per person in the household.

Childcare and household help

Crèche fees, after-school care, or a registered household employee: deductible up to €5,400 per year.

Donations

Gifts to recognised public-interest organisations, with a minimum of €120 per year.

Extraordinary charges

Unreimbursed medical expenses, dental costs, divorce costs, prescription diets: deductible if they exceed a threshold linked to your income and family situation.

Don't forget: you must declare your worldwide income

Here's the trade-off. Once you opt for assimilation, you need to declare all your income, both from Luxembourg and from abroad. Your partner's foreign salary, rental income in your home country, pensions: everything goes on the return.

But don't panic. Your foreign income is not taxed in Luxembourg. It's only used to calculate your overall tax rate. That rate is then applied exclusively to your Luxembourg income.

Home office: watch the thresholds

If you work from home, it can affect both your assimilation eligibility and the taxation of your salary. Here's what you need to know.

For assimilation, the first 50 home office days are treated as if you worked in Luxembourg. They don't count against the 90% threshold. So even if you're working from home regularly, you may still qualify.

For taxation, the thresholds vary by country:

Country of residence	Max home office days before tax impact
France	34 days
Belgium	34 days
Germany	34 days

If you exceed these limits, the salary for the extra days may become taxable in your country of residence rather than in Luxembourg.

Married cross-border workers: the fixed tax rate and form 166

If you're married and both working (or one of you works in Luxembourg while the other works abroad), there are a few extra things to think about.

Married non-residents don't get tax class 2 directly. Instead, you get a fixed tax rate, which is the equivalent of class 2 applied at source. Your employer uses this rate to withhold tax from your salary each month.

The catch? That rate isn't always updated automatically. If one of you gets a raise, changes jobs, or starts earning more, the rate can become too low. The result: a nasty surprise at the end of the year when you owe the difference.

Form 166 is how you fix this. It's a form that lets you request an adjustment to your fixed withholding tax rate. You submit it to the ACD along with your last 3 payslips (for both spouses), and the administration recalculates your rate based on your current income and available deductions.

What if assimilation isn't in your interest?

In some cases, opting for assimilation might not be the best move. If your partner earns significantly more abroad than you do in Luxembourg, declaring that worldwide income could push your tax rate up rather than down.

This typically applies when the foreign income is much higher than the Luxembourg income. In those situations, it may be more advantageous to stay in tax class 1 without assimilation and skip the deductions entirely.

The good news is that this isn't a blind choice. You can simulate both scenarios on taxx.lu before committing, and see which option gives you the better result.

How taxx.lu helps cross-border workers

Cross-border tax situations are exactly where taxx.lu shines.

Automatic assimilation check. You enter your Luxembourg and foreign income, and taxx.lu automatically checks whether you qualify for assimilation. If you do, the platform ticks the right box on the form for you.

Real-time refund estimate. See your estimated refund or amount owed as you fill in your return. Compare the result with and without assimilation to make the right call.

Opti-Score. Once your return is complete, the Opti-Score shows you where you could still optimise for next year. Haven't maxed out your 111bis? Still paying insurance you're not claiming? The Opti-Score flags it, and you have the rest of the year to act.

Avis d'imposition check. If your tax assessment doesn't match your taxx.lu result, you can ask the team to review it (Plus, Premium, and Platinum packages). If there's an error on the administration's side, they'll prepare a lettre de recours for you.

Form 166 as an annex. Available at €59 as an add-on if you need to adjust your fixed withholding rate.

The 2025 tax return is live. Start now.

The official ACD forms are available from April 7, but your 2025 tax return is already ready to be filled on taxx.lu. Creating an account is free, and you can run as many simulations as you want at no cost. You only pay when you're ready to download the final form.

If you're a cross-border worker, the question isn't whether you should file. It's how much you're leaving behind if you don't.

Start your free simulation on taxx.lu