Insurance premiums that can be deducted when you file your Luxembourg tax return

Luxembourg’s tax system offers ways to reduce your income tax liability thanks to deductible insurance premiums. Article 111bis of the ITA^[1] allows you to deduct up to €3,200 per year for an old-age pension policy. The remaining balance of a single-premium insurance contract can benefit from a tax deduction of up to €6,000 (single person under 30) which is increased by €1,200 per child. These tax savings apply to Luxembourg tax residents and assimilated non-residents (anyone who earns most of their income in the country).

What is a tax-deductible insurance premium?

Deductible insurance premiums are payments made according to specific insurance policies. They can be subtracted from your taxable income. These premiums are governed by Articles 111 and 111bis of the Luxembourg Income Tax Act (LIR). They only apply to policies taken out with authorised companies in Luxembourg or other European Union Member States (EU).

The different types of tax-deductible insurance premiums

Luxembourg legislation recognises three main categories of tax-deductible insurance premiums.

Life, death, accident, disability, sickness and civil liability insurance

Tax-deductible insurance premiums are covered by Article 111 of the ITA and include:

• Life insurance: the policy must be for at least 10 years.
• Civil liability: only the CL part of the premium is deductible, whether it’s for a vehicle or home civil liability policy.
•  Accident, disability and sickness insurance: where payments are paid to recognised fraternal benefit societies (AKA friendly societies).

Please note premiums covering material risks (theft, fire, broken glass, vehicle collision or comprehensive insurance) are non-deductible^[2].

Outstanding balance death insurance

If this insurance pertains to a mortgage, it depends on how you pay/paid for the policy:

• As periodic premiums: tax-deductible within the standard allowance according to Article 111 LIR.
• As a one-off premium: for single-payment premiums, you will benefit from a higher allowance if the policy pertains to your main residence.

Old-age pension policy

An old-age pension policy must meet three conditions:

• Minimum duration of 10 years.
• Reach its term between your 60th and 75th birthday.
• No early pay-outs (except for serious illness or disability).

Good to know: Here are some examples to help you optimise your tax declaration.

Let’s take Gregory, a manager with a net annual salary of €40,000. His annual income tax without deductions is €4,649. By declaring €540 business expenses, €672 civil liability insurance, €3,200 for an old-age pension policy, his income tax is reduced to €3,464, meaning a saving of €1,185 per year.

Another example: a married couple with one child and €750  vehicle civil liability insurance, €65 private civil liability insurance, and €1,000 life insurance for their child. They can deduct up to €1,815 and save around €593 in income tax.

Allowances and tax deduction thresholds

Deductible amounts vary depending on the type of tax-free allowance and your family situation.

Tax-free allowances according to Article 111 LIR

The annual allowance is €672 per person in a tax household (as in everyone registered on the same tax return).

Single-premium outstanding balance

Thresholds are higher if the policy pertains to the purchase of a main residence (flat or house)^[3].

The amount for couples can be doubled if both parties are insured. However, the increased allowance for a child is only granted to one parent.

Old-age pension policy (Article 111bis LIR)

Since 2017, you can benefit from a tax deduction of €3,200 per year, per taxpayer, regardless of your age. This allowance is applied individually, meaning each spouse/civil partner/partner can take out an old-age pension plan.

Good to know: Foyer’s solutions.

Foyer’s insurance products are designed with income tax optimisation in mind:

–  horizon: flexible supplementary pension plan that’s tax-deductible up to €3,200 per year.

– protect4life: an insurance that combines death/savings cover. There is a tax-free allowance of up to €672 per household member.

– investment focus: outstanding balance insurance with an increased allowance for single-premium policies.

How do you deduct your insurance premiums?

Deducting your insurance premiums is easy to do.

1. Gather all the necessary documents. Insurers send their clients a tax certificate showing the annual deductible.
2. Complete your tax return.
   • Premiums covered by Article 111 LIR: section B.b “Insurance premiums and contributions” page 14 on Form 100F^[4].
   • Single-premium remaining balance insurance: section B.b “Insurance premiums and contributions” page 14 on Form 100F.
   • Old-age pension: special expenses section D, page 15.
3. Don’t file your tax return late. File your return on or before 31^st December of the year following the tax year concerned.
4. Attach your insurance tax certificates. The supporting documents provided by your insurer must be attached.

You can send your declaration by post or file online via MyGuichet.lu.

Good to know: myTax, the digital tax assistant by Foyer and Vireo.

The myTax tool will help you file your return  and can be accessed via your Foyer Customer Account section. It automatically identifies the tax deductions you can optimise, in particular with regard to your insurance products. You don’t need to be a tax expert to optimize your tax return, whether you live in Luxembourg or not.

The Luxembourg tax system encourages people to take out old-age pension plans or other savings by making insurance premiums tax-deductible. You can reduce your income tax considerably by taking advantage of various tax-deductible expenses.

The three key takeaways:

1. Comprehensive tax deduction options. These reduce your income tax while protecting you against various risks.
2. Tax deduction allowances are adapted to your family situation. These are particularly advantageous for single-premium remaining balance insurance and old-age pension insurance.
3. A simple tax declaration for all fiscal residents and tax-assimilated non-residents.

[1] https://impotsdirects.public.lu/dam-assets/fr/legislation/LIR/LIR2025.pdf
[2] https://guichet.public.lu/fr/citoyens/aides/logement-construction/aides-indirectes/primes-assurance-resident.html

[3] https://impotsdirects.public.lu/dam-assets/fr/legislation/legi17/lir-111-1-02112017.pdf

[4] https://impotsdirects.public.lu/fr/formulaires/pers_physiques.html