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Premiums paid by an employee to a supplementary pension scheme are tax deductible, under certain conditions.
A supplementary pension scheme (known as a 'second-pillar' scheme) is a scheme put in place by an employer for all employees or certain categories of employees of a company, to supplement the mandatory social security scheme ('first-pillar' scheme) or a private pension plan ('third-pillar' scheme) that depends on the private initiative of the taxpayer.
The objective of this supplementary pension scheme is to grant enrolled employees benefits that supplement those provided for under the legal social security schemes for retirement, death, invalidity, or survival.
The scheme is usually funded predominately by the employer. Employees may also pay premiums into this supplementary pension plan. The premiums they pay are tax-deductible up to a ceiling of EUR 1,200 per year per member of the scheme.
These expenses may be deducted by:
Personal premiums paid by employees are tax deductible if they are paid as part of a supplementary pension scheme put in place by a Luxembourg company, pursuant to the Law of 8 June 1999 on supplementary pension schemes.
In certain conditions, personal premiums paid under foreign supplementary plans by employees seconded to companies established in Luxembourg may also be tax deductible.
Employees can deduct the premiums paid to a supplementary pension scheme from their tax in one of the following ways:
These premiums are generally already deducted by the employer on the salary slip when they are paid. In that case, reporting the premiums in the tax return will not give rise to a tax refund.
Even when the employer takes the premium deductions into account when calculating salary, the employee taxpayer must mention them in the tax return or the annual adjustment.
Resident and non-resident employees who file a tax return by 31 March of the year following the tax year in question may deduct from their taxable income the premiums paid into an employer-sponsored supplementary pension scheme.
The employee must fill in box 1435 - section 2.B on page 14 of the income tax return (form 100).
They must also attach their Luxembourg annual compensation certificate (form 160) showing the annual amount of the premiums paid into the supplementary pension scheme.
The premiums are tax deductible up to a maximum of EUR 1,200 per year for each employee. These premiums have generally already been deducted by the employer on the salary slip when they are paid. In that case, reporting the premiums in the tax return will not give rise to a tax refund.
Where 2 employees are taxed jointly, the ceiling of EUR 1,200 per year is doubled.
Resident or non-resident employee taxpayer who does not satisfy the conditions for filing a tax return may deduct from their taxable income the premiums paid into an employer-sponsored supplementary pension scheme by filing a request for an adjustment of the tax withheld on their salary by way of the annual adjustment procedure by no later than 31 December of the year following the tax year in question.
This procedure is only necessary if the employer, upon establishing the employee's the salary slip, had not taken the tax deduction into account when calculating the withholding tax.
Taxpayers must also attach their Luxembourg annual salary certificate (form 160) to their request for adjustment, indicating the annual amount of the premiums paid into supplementary pension scheme.
These documents must be returned to the competent office for tax withholdings on wages and salaries (bureau d'imposition de la retenue d'impôt sur les traitements et salaires - RTS) for processing. The competent office depends on the taxpayer's domicile.
The adjustment request may also be submitted directly online via MyGuichet, by filling out an interactive questionnaire.
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)
Einkommensteuererklärung für ansässige und nicht ansässige Personen (Vordruck 100)
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)
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)