Taxpayers can deduct their Luxembourg or foreign social security contributions paid to a social security scheme (called '1st pillar' scheme) from their taxable income.
Social security contributions are considered to be special expenses (dépenses spéciales - DS) from a tax point of view.
The social security scheme is not to be confused with a supplementary pension scheme put in place by an employer ('2nd pillar' scheme) or a private pension plan ('3rd pillar' scheme), for which enrolment is at the taxpayer's personal initiative.
Who is concernedAll taxpayers with taxable income can deduct their social contributions paid to the social security system.
In order to be deductible, the contributions must have been paid:
- as a result of the employee's mandatory enrolment in the Luxembourg social security health insurance and pension insurance scheme; and/or
- in the form of mandatory contributions paid by an employee to a foreign social security scheme (only if the foreign country has signed a social security agreement with Luxembourg); and/or
- in the form of a taxpayer's personal contributions to an ongoing, voluntary or optional insurance plan or for the purchase of health insurance and pension insurance periods with a Luxembourg or foreign social security scheme (only if the foreign country has signed a social security agreement with Luxembourg).
In order to deduct voluntary or optional contributions paid to the social security, non-resident taxpayers have to request to be treated as Luxembourg residents for tax purposes.
How to proceed
All social security contributions regarding pension and health insurance are fully deductible.
Deduction of mandatory social contributions
The mandatory social contributions must always be listed as special expenses (DS) when:
- submitting a income tax return (form 100, page 14); or
- applying for an annual adjustment (form 163 R, page 5 for resident taxpayers and form 163 NR, page 3 non-resident taxpayers) in the event where the taxpayer does not meet the conditions for the filing of an income tax return. The request for annual adjustment can also be submitted online with the MyGuichet assistant by filling out a dynamic questionnaire.
As a reminder: the tax allowance (deduction) for mandatory contributions is in principle already accounted for by the employer or the pension fund in order to determine the tax withholding from salaries or pensions.
The employer or the pension fund will deduct and transfer the contributions to the Joint Social Security Centre (Centre commun de la sécurité sociale – CCSS). In order to determine the tax withholding on salaries, the employee's share of social contributions (pension fund and health fund) is deducted from the employee's gross salary. The employer's share is in principle not listed in the gross salary and subsequently not deducted from the gross salary.
Deduction of voluntary or optional social contributions
Resident taxpayers can:
- submit their tax return and indicate the amounts paid on page 13 of the tax return (form 100); or
- apply for an adjustment of tax withholdings based on an annual adjustment (page 4 on the form 163 R) if they do not satisfy the conditions for filing an income tax return. The application for adjustment can also be submitted online with the MyGuichet.lu assistant by filling out a dynamic questionnaire; or
- enter the amounts paid during the year on their tax card. For this, they fill in the amounts paid on page 4 of form 164 R.
Non-resident taxpayers treated as residents for tax purposes can submit an income tax return and indicate the amounts paid on page 13 of the income tax return (form 100).
Supporting documents to be included with the application
Taxpayers are requested to attach a copy of their annual salary or pension certificate, issued by the employer or the pension fund, or a copy issued by the Luxembourg Joint Social Security Centre or, if applicable, by the equivalent foreign institution listing the social contributions paid during the tax year.
Forms / Online services
Décompte annuel de l'année 2018 (personnes physiques résidentes salariées ou pensionnées non soumises à une imposition par voie d'assiette - 163 R)
Lohnsteuerjahresausgleich für das Jahr 2018 (ansässige steuerpflichtige Arbeitnehmer und Rentner die nicht einer Besteuerung durch Veranlagung unterliegen - 163 R)
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)
Antrag auf Ausstellung, Berichtigung, Eintragung einer Ermäßigung oder Ausstellung eines Duplikates einer Steuerkarte für ansässige Steuerpflichtige (Vordruck 164 R D)
Décompte annuel de l'année 2018 (personnes physiques non résidentes salariées ou pensionnées non soumises à une imposition par voie d'assiette - 163 NR)
Lohnsteuerjahresausgleich für das Jahr 2018 (nichtansässige steuerpflichtige Arbeitnehmer und Rentner die nicht einer Besteuerung durch Veranlagung unterliegen - 163 NR)