Deduction, tax reduction, tax credit: what differences?
Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister)
There are several ways to reduce your income tax.
One deduction is an amount that is deducted from your taxable income.
You have income of €10 000 and a tax deduction of €1,000. You will be taxable only on €9,000.
The deduction can be made on any of the following income:
- Your gross income (for example, deduction of child support)
- One of your block income (for example, deduction of professional expenses of your salaries and wages)
One tax reduction is an amount deducted from the amount of your tax (for example, tax reduction for donations to general interest organisations).
It applies only if you have a tax to pay.
You have made a donation to an association that entitles you to a tax reduction €700.
If your tax is €1,500, then you will only pay €800.
If you do not pay income tax, you cannot benefit from the tax reduction.
If you pay little, you can get only a portion of the tax reduction.
For example, if you are entitled to a tax reduction of €700, but you must €500 of tax, the €200 is "lost".
One tax credit is also an amount deducted from your tax (for example, child care expense tax credit).
Unlike the tax credit, the tax credit is refunded to you in whole or in part if:
- It exceeds your tax
- You are not taxable
You are entitled to a tax credit €700 for your child care expenses. If only €500 tax, tax services will then refund you the excess of €200.
sums less than €8 are not refunded.
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- General tax code: article 1965 LNon-repayment of tax claims of an amount less than € 8
- Taxes: Accessing Your Personal Space
- 2022 Online 2021 Income Statement
- Income tax return (paper)
- Calculation simulator for 2022: 2021 income tax
- What is the difference between a tax cut and a tax credit?Ministry of Finance
- I declare my tax credits and reductionsMinistry of Finance
- 2022 Practice Brochure - 2021 Income Tax ReturnMinistry of Finance