Deduct your pension insurance premium from your tax return in Luxembourg

In addition to the legal pension fund and a possible Corporate Pension Plan subscribed by your employer for your benefit, you can also subscribe to an individual Pension Plan that can be deducted from your tax return.


Indeed, the increasing life expectancy of workers in Luxembourg should stir you to save for your retirement.


What are the conditions for deducting an individual Pension Plan from your tax return ?


To benefit from the related tax deduction, you must :


  • Pay a premium of up to €3,200 during the tax year in individual Pension Plan contract ;


  • The contract must have a minimum duration of 10 years AND maturity payment must be made no earlier than 60 years old and no later than 75 years old.


Actually, if you are older than 50 years, the minimum 10-year term must be respected and you will no longer be able to contract an individual Pension Plan if you are older than 65 years.

The early cancellation and reimbursement of your individual Pension Plan is not allowed excepted in case of serious illness or disability.


Since 2017 tax year, you can receive 100% of earned capital paid at maturity. Alternatively, you can also choose for a percentage of the capital to be paid at maturity in the form of a life annuity which can be reversible (or not) to the benefit of the surviving spouse.


Non-resident crossborder workers may also deduct an individual Pension Plan provided that they meet the tax assimilation conditions and have elected for the same tax treatment as an homeland resident.


Under the collective way of taxation, the spouse or legal partner may also subscribe to an individual Pension Plan provided that he or she works in Luxembourg and meets the tax assimilation conditions.

A couple can benefit from a tax-deductible savings up to 2 x 3.200,00 € or 6.400,00 € per year !


In an individual Pension Plan, the premiums invested can be guaranteed (with a guaranteed capital at maturity) or linked to investment funds (without capital guarantee). Additional tax rules applies if you wish to invest in the unguaranteed possibility.


By completing your tax return, we will calculate your tax benefit on the pension premiums you wish to pay and advise you on the tax deduction conditions for both possibilities.


If you are a crossborder worker, you will also know if you meet the tax assimilation requirements in order to benefit from the same tax advantages as an homeland resident.