Every year, it is the same old story: we have to fill in our tax declaration, but did you know that your tax declaration, correctly optimised, can save you money by reducing your taxes?
Home savings plan
The purpose of a home savings scheme is to enable you to receive a loan on favourable terms to finance your own home in exchange for the payment of contributions. You can deduct the contributions paid into a home savings scheme from your taxable income.
These contributions, together with the interest income paid into a home savings scheme, are deductible up to a maximum of €1,344 per year as long as the youngest spouse is under 42 years of age and €672 thereafter. This ceiling is increased by its own amount for the spouse (or partner in the case of a partnership) and for each child in the household.
In order to benefit from the tax deduction, the home savings contract is subject to certain conditions, the main one being that it must be taken out to finance the construction, acquisition or conversion of a flat or house used for personal living purposes.
Private pension plan
The private pension insurance contract is often called the third pillar because it is a private initiative in opposition to the compulsory social security scheme – the first pillar – and to the additional pension scheme set up by the employer – the second pillar.
The deduction for a private pension insurance contract is €3,200.
Personal loan and debit interest
You can also deduct from your total net income the debit interest linked to personal loans. The debit interest on your current account or your credit card is also deductible.
However, interest on a loan taken out to finance the acquisition of a personal dwelling or a rented building, as well as interest on a loan related to a business or self-employed activity, is not included in this category.
The interest on the loan is deductible up to a maximum of €672 per year. This ceiling is increased by its own amount for the spouse (or partner in the case of a partnership) and for each child in the household.
Insurance contributions and premiums
Certain contributions and insurance premiums may also be deducted from your total net income, those are mainly paid for life, death, accidents, invalidity, sickness or civil liability insurance.
In addition to the deduction ceiling of €672 per person in the same household, a one-time premium for debt balance insurance to ensure payment of a loan for the purchase of the main residence is also deductible. The limit is €6,000 maximum, €12,000 in case of collective taxation and increased by €1,200 for each of the taxpayer’s children subject to a tax allowance for children.
Think about it: if you have the four financial products mentioned above, you can deduct more than a few thousand euros per year from your total net income when doing your tax declaration! Not bad, is it?