1. General Family Expenses - upper limit: €250 pp
In this new category of expenditure, taxpayers may deduct 35% of the amount spent by any member of the household, with a maximum credit of €250 per taxpayer. These include general expenses such as supermarket bills, utility invoices, etc. To achieve the maximum credit of €250 requires annual spending up to €714 per person (€1,428 per couple).
2. Medical - upper limit: €1,000
You can achieve a 15% tax credit of documented medical expenses with an overall limit of €1,000. These include services provided by health professionals, pharmaceutical, medical and orthopedic goods, optical material, medical insurance, nurses, physiotherapists, doctors and dentists. Expenses charged VAT at 23% need to have the associated prescription. Note that premiums for health insurance now qualify in this category. Medical expenses from abroad are also eligible but must be introduced manually by the taxpayer.
3. Education - upper limit: €800
You can deduct up to 30% of education expenses incurred by any family member as long as they are exempt from VAT or taxed at the reduced VAT rate, with an overall limit of €800. Be aware school supplies taxed at the maximum VAT rate (23%), such as pens, backpacks, cases, notebooks, pencils, erasers, markers or rulers, are no longer deductible this year.
4. Housing - upper limit: €502
You may deduct 15% of the amounts paid in rent, up to €502. This limit may be increased to €800 if your overall taxable income is less than €7,000. In the case of households with income tax base between €7,000 and €30,000, the amount reduces. For mortgage interest, you can deduct up to 15% of contracts prior to 31 December 2011, up to €296. This limit may be raised to €450 if the taxpayer’s income falls below €7,000. Between €7,000 and €30,000, the credit also reduces.
5. Alimony / Child Support - no limit
Starting this year, 20% may be deducted from the documented amounts for alimony and child support with no upper limit. This income must be court ordered.
6. Nursing Homes - upper limit: €403.75
You may deduct expenses related to nursing homes (when exempt from VAT or taxed at a reduced rate) up to 25%, with an overall limit of €403.75. This deduction includes costs for home nursing and care from institutions for the elderly as well as charges for people with disabilities who do not have income above the minimum wage.
7. Benefit from VAT - upper limit: €250
You can also deduct 15% of VAT paid on services from mechanics, hairdressers, beauticians and restaurants with a maximum credit of €250. Again, for this benefit, it is essential to always ask for invoices with your name and tax number.
8. Retirement Savings Plans (“PPR”) - upper limit: €400
20% of the amount invested in retirement savings plans is deductible with a ceiling of €400 per person under 35 years; €350 between 35 and 50 years of age; and €300 for those over 50.
9. Donations - 15% of tax due
Donations are eligible for a 25% credit up to 15% of tax owed. Donations to central, regional, or local government are without upper limits.
10. Urban Renewal - upper limit: €500
Charges borne by the owner related to the rehabilitation of buildings located in qualifying urban renewal areas are eligible for a tax credit of 30% up to a maximum of €500.
Maximum limits of tax credits
In addition to the upper limits for each category, there is an overall maximum ceiling on tax credits for each taxpayer. The household aggregate with total taxable income up to €7,000 has no limit on credits (just as before). Households with incomes above €80,000 have an overall limit of €1,000. For families with income tax base between €7,000 and €80,000, the limit is defined by the following formula:
€1,000 + [(€2,500 - €1,000) x [€80,000 - taxable income / €80,000 - €7,000]]
Households with three or more dependents in charge have an increase of 5% per child.
Dennis Swing Greene is chairman and International Tax Consultant for euroFINESCOs.a.