Expense Reimbursement Policy in Luxembourg

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.