Start saving and avail of attractive tax deductions
Life insurance offers myriad advantages, among them favourable tax deductions which allow you to cleverly combine savings with reduced taxes.
Foyer has developed a range of products designed to help you provide for your future retirement and benefit from tax deductions at the same time.
Under Luxembourg law, two types of tax deductions exist for insurance and life insurance policies:
- Premiums paid in respect of pension policies or retirement savings plans are tax deductible under article 111bis of the law on income tax. Our horizont60 Invest, horizont60 Capi and horizont60 Protect insurance products come under this category;
- Certain insurance premiums, in particular life insurance premiums, are tax deductible under article 111 of the law on income tax. Our zenith60, helios invest, helios protect, nova and cumulus protect insurance products come under this category.
Article 111bis of the law on income tax aims to encourage individuals to establish private pensions by granting tax deductions in respect of premiums paid into pension policies.
Pension plan premiums deductible under article 111bis :
Under the terms of article 111bis, premiums paid in respect of a retirement savings plan are subject to a special ceiling which varies according the policyholder's age at the beginning of the fiscal year:
|Age||Maximum amount deductible per annum|
|less than 40 years of age||EUR 1.500|
|between 40 and 44 years of age||EUR 1.750|
|between 45 and 49 years of age||EUR 2.100|
|between 50 and 54 years of age||EUR 2.600|
|over 55 years of age||EUR 3.200|
When two jointly-taxed spouses each take out a separate pension policy, the maximum amount deductible per annum is calculated on an individual basis and combined.
However, such tax deductions are subject to certain conditions under article 111bis:
- At least 50% of the accumulated savings must be repaid in the form of a monthly life annuity
- The benefits may not be paid prior to the policyholder's 60th birthday
- The policy must have a term of at least ten years
- The policyholder must be the insured party
Article 111bis offers numerous advantages:
- Up to 50% of the benefit may be paid in the form of a lump sum
- Should the investor die during the validity period of the policy, the accumulated savings may be paid to the beneficiary nominated under the policy
- The term of the policy may run until the insured party's 75th birthday.
La prestation peut être versée pour moitié au maximum sous forme de capital
Under article 111 of the law on income tax, certain types of insurance premiums may be deducted from your total net taxable income.
Premium payments in respect of our zenith60 retirement savings plan fall into this category. Find out about other tax deductible insurance premiums.
Maximum amounts deductible under article 111
- Article 111 of the law on income tax lays down the maximum amounts deductible (ceilings) from your taxable income.
- The maximum amounts deductible in respect of insurance premiums vary depending on your family situation.
|Without spouse|| With spouse
|Taxpayer||€ 672,00||€ 1.344,00|
|Taxpayer with 1 child||€ 1.344,00||€ 2.016,00|
|Taxpayer with 2 children||€ 2.016,00||€ 2.688,00|
|Taxpayer with 3 children||€ 2.688,00||€ 3.360,00|
|Taxpayer with 4 children||€ 3.360,00||€ 4.032,00|
|Taxpayer with 5 children||€ 4.032,00||
Tax deductibility conditions for life insurance
In order to qualify for the above tax deductions, life insurance policies that include a savings component must have a term of at least 10 years.
Taxation when your life insurance policy matures
Under the section of article 111bis dealing with pension policies:
When the accumulated savings are repaid in the form of a lump sum (maximum 50% of the total savings), the lump sum is classified as extraordinary income and taxed at half the global rate.
When the accumulated savings are repaid in the form of a life annuity, up to 50% of the monthly life annuity payment is tax exempt.
Under the section of article 111 dealing with certain insurance payments:
The lump sum paid to the life insurance policyholder is exempt from income tax.
Annuity payments are taxable as pension or annuity income.
Click here to fill out your income tax declaration.
Contact your Foyer agent who will ensure that you don't miss out on any available tax deductions.