Employers in Luxembourg can reimburse employees for business-related expenses without creating taxable income, provided the reimbursements comply with statutory limits and documentation requirements.
Invoice Requirements
Invoices do not need to list the employer’s name for tax-free treatment, but they must show:
Vendor name
Date
Amount
Description of expense
General Principles
Reimbursements must be business-related, properly documented, and not constitute disguised remuneration.
Expenses that provide a personal benefit may be treated as taxable income.
Mileage Reimbursement
Employees using their own car for business trips may receive a tax-free mileage allowance of €0.30 per km, regardless of distance or vehicle type.
Any reimbursement above €0.30/km is considered taxable income for the employee.
Transport Costs
Public Transport & Flights: Actual costs for train, bus, plane, or similar modes of transport must be reimbursed based on receipts.
Taxis, Trams, Rental Cars: Reimbursement should be based on documented actual expenses. Lump-sum allowances are allowed only if they comply with statutory ceilings and internal policy.
Per Diem Allowances
Domestic Travel (within Luxembourg):
Day allowance: €14
Night allowance: €56
International Travel:
Varies by destination. Examples for 2025:
Germany: Day €60, Night €195–€220
Belgium: Day €50, Night €160–€250
Tax Treatment:
Per diems within statutory limits are tax-free.
If meals or accommodation are provided, allowances must be reduced by 30%.
For night allowance without a receipt, only 20% of the full amount is tax-free; the remainder is taxable.
VAT Recovery
Luxembourg VAT (TVA) rules apply. Employers can recover VAT on business expenses if invoices meet legal requirements and expenses are for business use.