Several important amendments to the Luxembourg Income Tax Law (L.I.R.) will come into force as from 2026.

🏠 Sustainable Energy Renovation – Accelerated Depreciation

📌 Art. 32 ter, para. 3 L.I.R.

Rental properties (or parts of buildings) that have undergone a sustainable energy renovation may benefit from an accelerated depreciation rate of 10% on the related investment costs.

This applies where the energy renovation was completed between 1 January of the tax year and less than 9 years ago.
Only renovations that have received state financial aid for sustainable energy improvements in the housing sector qualify for this measure.

💰 Old-age Pension Savings – Increase of the Deductible Ceiling

📌 Art. 111 bis, para. 7 L.I.R.
📌 Art. 111 ter, para. 7 L.I.R.

The annual amount deductible as an old-age provision expense within the meaning of this article is now EUR 4,500 instead of EUR 3,200.

The annual amount deductible as an old-age provision expense within the meaning of this article is now EUR 4,500 instead of EUR 3,200.

👩‍💼👨‍💼 New Tax Allowance: Continued Professional Activity

📌 Art. 129 g L.I.R.

New article introduced by the tax authorities, establishing a deduction from taxable income referred to as the “professional activity retention allowance.”

Persons concerned: Taxpayers who are entitled to a personal pension from a Luxembourg institution but who do not actually receive it.
A “personal pension” refers to pensions paid by:

• CNAP;
• the pension fund for municipal civil servants and employees;
• the State Personnel and Organisation Management Centre;
• the National Society of Luxembourg Railways;
• the Central Bank of Luxembourg.

Amount of the allowance: The allowance may amount to up to EUR 9,000 per year, with a limit of EUR 750 per month for the taxpayer.
The entitlement to the allowance begins in the month following the month in which the right to a personal pension arises.
It may not exceed the amount of the taxpayer’s income after deduction of other allowances and special expenses.

Conditions: In order to benefit from such an allowance, the taxpayer must be in possession of a certificate issued by the competent Luxembourg pension institution, certifying that the taxpayer does not receive a personal pension despite being entitled to one.
This document must state the taxpayer’s surname, first name, identification number, and the date on which entitlement to the personal pension commenced.
The request may be made via the tax return or via the annual tax assessment if the allowance has not already been applied by the employer.