Pension savings in Luxembourg: how article 111bis works
The third pillar is the only one you steer yourself. It is also the only one that hands back part of the tax you paid.
The Luxembourg pension system rests on three pillars: the state pension paid by the CNAP, the supplementary scheme an employer may have set up, and your own savings. The third is the only one you decide on alone — and the one the legislator encourages through tax.
What article 111bis L.I.R. provides
Contributions to an old-age provision contract are deductible from taxable income, up to an annual ceiling per taxpayer. The ceiling has been raised in recent years: your adviser will tell you the figure that applies when you sign, because that is the one that counts — not the one in an article read last year.
The conditions
- A minimum contract term, without which the tax advantage is lost.
- A minimum age at the point the capital is released.
- Payment as capital, as an annuity, or in staged withdrawals.
Cross-border workers: the advantage applies too
Non-residents who file a tax return in Luxembourg can also use the deduction. The question to put to your adviser is how the payout is taxed later, which depends on where you live at the time the savings are paid out.
How to think about it
The annual tax saving is real, but it is not the only criterion. An old-age provision contract is a long commitment; the investment approach — cautious, balanced or dynamic — affects the final result as much as the tax advantage at the start. Have both modelled before fixing a monthly amount.
Information article written by iSOLUTIONS S.à r.l. It does not replace advice from your agent and creates no contractual commitment. The general and particular conditions of your contract are what count.
