Deducting the premiums paid to a private pension plan

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Annual

Non residents

Residents

The purpose of a retirement savings plan (called 3^rd pillar, Article 111bis contract) is to allow the subscriber to build up savings for their retirement.

As such, taxpayers may, under certain conditions, deduct the premiums paid into an old-age pension contract as special expenses - DS - from their income tax.

These premiums are not to be confused with those due under the social security scheme (called 1^st pillar) or under the law on the supplementary pension scheme of 1999 (called 2^nd pillar, L.R.C.P.). set up by the employer.

Who is concerned

Resident taxpayers and non-resident taxpayers treated as resident taxpayers can deduct the premiums paid to an old-age pension contract from their taxes.

Prerequisites

Conditions relating to private pension plans

Private pension plans must have been taken out with an insurance company or a credit institution:

approved in Luxembourg; or
approved and controlled by the competent authorities of another EU Member State, and entitled to carry out its activities in Luxembourg.

Premiums paid to one or more private pension contracts can only be deducted if:

the contract was concluded for a minimum duration of 10 years;
the accumulated savings are payable to the taxpayer at the earliest at the age of 60 and at the latest at the age of 75;
the pension plan must provide that early repayment of savings is excluded, except in the case of serious illness and disability;
the benefit is payable either as capital, or as a monthly life annuity, or as a combination of the two. For the 2016 tax year included, the benefit is payable up to a maximum of 50% in the form of capital and the remainder in the form of monthly life annuities;
investment products and the investment policy satisfy specific conditions.

The early repayment of savings, normally excluded before the minimum subscription period of 10 years or before the age of 60, is penalised by taxation at the normal rate of the total amount reimbursed.

Specific prerequisites for non-resident taxpayers

Married non-resident taxpayers, provided they are eligible, must choose to be taxed as resident taxpayers before being able to deduct from their taxes the premiums paid into a private pension scheme.

How to proceed

Deductible amount

Starting from the 2017 fiscal year, premiums paid to a private pension plan can be deducted up to a maximum of EUR 3,200 per year, regardless of the age of the policyholder*.

The maximum limit allowed under the tax deduction scheme is individual and is established separately for each spouse who has concluded a pension plan.

This annual deductibility limit is applicable only once per taxpayer, regardless of the number of contracts in progress.

If the taxpayer has not been liable to tax in Luxembourg during the whole year, the maximum deductible amount is reduced on the basis of the whole months during which the taxpayer was not subject to taxation in Luxembourg.

* For the 2016 tax year: The maximum annual deductible amounts under a private pension plan are as follows:

for contributors under the age of 40 on 1 January of the tax year, the maximum deductible amount is EUR 1,500 per year;
for contributors between 40 and 44 years of age on 1 January of the tax year, the maximum deductible amount is EUR 1,750 per year;
for contributors between 45 and 49 years of age on 1 January of the tax year, the maximum deductible amount is EUR 2,100 per year;
for contributors between 50 and 54 years of age on 1 January of the tax year, the maximum deductible amount is EUR 2,600 per year;
for contributors between 55 and 74 years of age on 1 January of the tax year, the maximum deductible amount is EUR 3,200 per year.

Deduction of premiums paid

To deduct premiums paid for a private pension plan as special expenses (DS):

resident or non-resident taxpayers treated as residents can submit an income tax return and indicate the amounts paid on page 14 of the income tax return (form 100); or
the resident taxpayer can enter the amounts paid on page 5 of form 163 R (annual adjustment) if he does not meet the conditions for filing an income tax return. The adjustment request may also be submitted directly online via MyGuichet.lu, by filling out an interactive questionnaire; or
the resident taxpayer can enter the amounts paid on their tax card during the year. To do so, they have to fill in the amounts paid on page 5 of the 164 R form;
the married salaried taxpayer or pensioner (resident or non-resident treated as resident) can declare the amounts paid in the application for simulation or individual taxation / RTS rate in order for them to be taken into account when establishing the projected tax rate on their tax card.

Supporting documents

The taxpayer is requested to attach a certificate issued by the insurance company or credit institution which certifies that the amount of premiums paid during the year complies with the legal conditions of deduction (Article 111bis).

 The Luxembourg Inland Revenue (
 Administration des contributions directes - ACD) 
 reserves the right to request additional 
 supporting documents as part of the process of verifying any information, statements, applications, declarations, claims or appeals submitted to its services.

Forms / Online services

Income tax return for resident and non-resident natural persons (form 100)

Déclaration pour l'impôt sur le revenu pour personnes physiques résidentes et non résidentes (modèle 100)

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Déclaration pour l'impôt sur le revenu pour personnes physiques résidentes et non résidentes (modèle 100)

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Einkommensteuererklärung für ansässige und nicht ansässige Personen (Vordruck 100)

Den Vorgang öffnen

Déclaration pour l'impôt sur le revenu pour personnes physiques résidentes et non résidentes (modèle 100)

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Einkommensteuererklärung für ansässige und nicht ansässige Personen (Vordruck 100)

Das Formular herunterladen

Demande en établissement, rectification, inscription d'une modération ou établissement d'un duplicata d'une fiche de retenue pour contribuables résidents (Modèle 164 R F)

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Antrag auf Ausstellung, Berichtigung, Eintragung einer Ermäßigung oder Ausstellung eines Duplikates einer Steuerkarte für ansässige Steuerpflichtige (Vordruck 164 R D)

Das Formular herunterladen

Décompte annuel (personnes physiques résidentes salariées ou pensionnées non soumises à une imposition par voie d'assiette - 163 R)

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Lohnsteuerjahresausgleich (ansässige steuerpflichtige Arbeitnehmer und Rentner die nicht einer Besteuerung durch Veranlagung unterliegen - 163 R)

Das Formular herunterladen

Décompte annuel - Modèle 163 - 2022

Accéder à la démarche

Pour les contribuables mariés : demande de simulation ou d'individualisation / taux RTS

Accéder à la démarche

Für verheiratete Steuerpflichtige: Simulation oder Antrag auf Einzelveranlagung / Steuersatz RTS

Den Vorgang öffnen

Who to contact

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Luxembourg Inland Revenue

45, boulevard Roosevelt
L-2982 Luxembourg
Luxembourg

Please click on the link below to find the competent department.

Luxembourg Inland Revenue Path to Luxembourg Inland Revenue

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