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Income Tax - Tax Calculation

Verified 08 avril 2021 - Legal and Administrative Information Directorate (Prime Minister)

Gross tax is calculated using a progressive scale. The amount obtained is then corrected (cap, haircut) to determine the net tax payable. To calculate your income tax, you can use the online simulator. You can also do it yourself, by steps.

To calculate your tax amount, you can use the calculation simulator:

You can also view online brochure on tax return and tax return explanatory note. These documents contain a record to calculate the amount of tax.

You must list your income by category and add it up, including:

  Warning : you have to apply some discounts on such income, in particular business.

Example :

A single person who has no income other than his salary and declares €30,000 of taxable net salary. If he chooses the standard deduction of professional expenses 10%, its overall gross income will be:

€30,000 -€30,000 x 10%) = €27,000.

Overall net income = total gross income - deductible expenses

The deductible expenses include:

Taxable net income = overall net income - special allowances

These discounts special care for the elderly and disabled.

You may also be concerned if you connect your child to your tax home married or family.

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You are 65 or older

You must be 65 or older by December 31, 2020:

  • If your income is less than €15,340, you are entitled to a €2,448.
  • If your income is between €15,340 and €24,690, you are entitled to a €1,224.

This allowance may be doubled if 2 members of the household meet the age requirement.

This allowance cannot be combined with the special allowance for the disabled.

You are invalid

  • If your income is less than €15,340, you are entitled to a €2,448.
  • If your income is between €15,340 and €24,690, you are entitled to a €1,224.

This allowance cannot be combined with the special allowance for the elderly.

You attach your child who is married or in charge

You receive a discount of €5,959 if you connect to your tax home:

  • your child who is married or a partner of a civil partnership, with or without children
  • or your responsible child.

Your child must also:

  • be less than 21 years of age, or less than 25 years of age if he or she is pursuing
  • or perform national service, regardless of age.

The determination of gross tax is carried out in several successive stages.

Determine the number of tax shares

The number of shares you are entitled to depends on your situation:

It also takes into account your dependants:

Calculate Family Quotient

Family Quotation = taxable net income / number of tax shares in the household

Example :

A couple has 2 shares. If its taxable net income is €30,000, its family quotient will be: €30,000 / 2 = €15 000.

Apply Schedule

The scale is applied to the family quotient obtained.

This schedule consists of several tranches.

2020 Progressive Scale

Slices

Tax rate to be applied on the corresponding tranche

(or marginal tax bracket)

Up to €10,084

0

From €10,085 to  €25,710

11%

From  €25,711 to  €73,516

30%

From  €73,517 to €158,122

41%

More than €158,122

45%

Example :

For a single person (single family) whose taxable net income is €30,000, without any reduction or deduction.

Its family quotient is €30,000.

For the calculation of his tax:

  • Up to €10,084 : 0
  • From €10,085 to  €25,710 : (€25,710 - €10,085) 11% = €15,625 × 11% = €1,718.75
  • From €25,711 to €30,000 : (€30,000 - €25,711 ) x 30% = €4,289 × 30% = €1,286.70

The marginal tax rate (MTR) for this single person is 30%, because its family quotient puts it in this bracket. But not all income is taxed on 30%.

Its gross tax is: €0 + €1,718.75 + €1,286.70 = €3,005.45.

This tax must then be multiplied by the number of shares in the tax household. In this example, it will be multiplied by 1 since it is a single.

Its gross tax will therefore be €3,005.45.

Example :

For a married couple without children (2 unit household) who received a taxable net income of €60,000.

Its family quotient is €60,000 : 2 = €30,000.

For the calculation of his tax:

  • Up to €10,084 : 0
  • From €10,085 to   €25,710 : (€25,710 - €10,085) 11% = €15,625 × 11% = €1,718.75
  • From €25,711 to €30,000 : (€30,000 - €25,711) x 30% = €4,289 × 30% = €1,286.70

The gross tax of each member of the couple is: €0 + €1,718.75 + €1,286.70 = €3,005.45.

This tax must then be multiplied by the number of shares in the tax household. In this example, it will be multiplied by 2 since it is a couple.

The couple will therefore have to pay a €3,005.45 × 2either €6,010.9.

The marginal tax rate (MTR) for this couple is 30%, because its family quotient puts it in this bracket. But not all income is taxed on 30%.

Gross tax can be adjusted in certain situations.

To calculate your net tax, devices are used depending on your situation:

  • Limit the effects of the family quotient
  • Discount (if your income is low)
  • Reductions and tax credits
  • Contribution on high revenues

Limit the effects of the family quotient

The tax reduction related to the family quotient is limited to €1,570 for each additional half share (€785 for each additional quarter share).

In certain specific situations, the tax reduction linked to the family quotient is different, for example:

Discount

The discount will reduce your tax if you are taxable but your income is modest.

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You're single

You receive a discount if the gross amount of your income tax does not exceed €1,722.

The haircut is equal to the difference between €779 and 45,25% the amount of your tax.

Example :

If your gross tax is €1,400 :

€1,400 x 45,25% = €633.50

The haircut is €779 - €633.50 = €143.50. It is deducted from your tax.

The amount of tax after the discount is €1,400 - €143.50 = €1,256.50.

You are a couple subject to common taxation

You receive a discount if the gross amount of your income tax does not exceed €2,849.

The haircut is equal to the difference between €1,289 and 45,25% the amount of your tax.

Example :

If your gross tax is €1,400 :

€1,400 x 45,25% = €633.50

The haircut is €1,289 - €633.50 = €652.50. It is deducted from your tax.

The amount of tax after the discount is €1,400 - €652.50= €747.50.

Reductions and tax credits

The reductions and tax credits to which you are entitled must be deducted from your tax.

For example donation discount organisations of general interest.

  FYI : tax is not payable when the amount is less than €61. This is the amount after the discount and tax reductions, but before any tax credits are applied.

Outstanding contribution on high incomes

In case of high income, exceptional contribution can be added to income tax.