Welcome to Part II of our tax advent calendar—one tax tip each day this December!

(OK, forgive us if we're nerds, but we love tax matters. And we know tax matters).

Here's part one if you missed it:

Three VAT tips for 2016 year-end

Or, read on for four fresh tips:

Come with me if you want to give

Be charitable sooner rather than later: donations made in 2016 to qualifying charitable institutions can be deductible on your 2016 Luxembourg individual income tax return. For the donation to be deductible, a minimum yearly aggregated contribution of €120 is required; the deduction applies to either €1,000,000 or 20% of your household's taxable income, whichever is lower.

Do it—do it now

If your revenue intake has decreased since your third quarter individual income tax prepayment, then it may be beneficial for you to check if your fourth quarter prepayment could be reduced or cancelled. Contact the head of the relevant tax office and apply in writing before 10 December. More information here.

Your tax card—give it to me

Employees who do not remit their tax cards to their employer(s) in due time are likely to experience a painful situation:

  1. Without the tax card, the employer must apply a lump-sum taxation based on tax class 1 which has a 33% tax rate at minimum ranging up to 44.1%.
  2. The employee could, consequently, suffer cash flow issues, and may not be able to recover excess wage tax paid in 2016 after year-end (should there be any).

Our recommendation (approved by Saint Nicholas): collect your 2016 tax card and give it to your employer before year-end!

Self-employed workers: get to the tax chopper

If you're self-employed, make sure you're in gear for the last tax actions needed in 2016. If you act in your own name, there may still be time to lower your individual income taxes. If you're a Luxembourg-based taxpayer then it's important to settle your VAT payments before 31 December to ensure that you'll get this amount deducted from your 2016 self-employed taxable income.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.