111bis Private Pension: €4,500 Deductible on Your 2026 Income
Skimming?
We've prepared the shortcut for you.
111bis is the third pillar of your pension: an individual retirement savings contract, opened with an insurer or a bank, locked for at least 10 years and at least until you reach age 60. What you pay into it, up to the maximum limit, is deducted from your taxable income. At payout, between ages 60 and 75, the capital lump sum is taxed at half the global rate (half of your average tax rate) and any annuity is only half-taxed.
It's for you if
- You are a Luxembourg resident paying tax in Luxembourg, with a marginal rate that makes the deduction worthwhile (read about the tax scale and marginal rate).
- You are a French, Belgian, or German cross-border worker fiscally treated as a resident (assimilated): the deduction then goes through your tax return. Read our guide on tax assimilation.
- You are under 65: a contract must be set up at the latest the day before your 65th birthday.
Not for you if you might need this money before age 60: except in cases of serious illness or disability, an early withdrawal is taxed in full at the standard rate. Also not for you if you are a non-assimilated cross-border worker: no deduction applies in that case.
Key figures to remember
| Item | Value | Year |
|---|---|---|
| Deduction limit | €3,200 per taxpayer | 2017 to 2025 income |
| Deduction limit | €4,500 per taxpayer | From 2026 income onwards |
| Age requirement for the limit | None | Since 2017 |
| Jointly taxed married couple | Limit calculated for each spouse holding their own contract (2 × €3,200 in 2025, 2 × €4,500 in 2026) | 2025 and 2026 |
| Multiple contracts | Single cap for all payments combined | 2025 and 2026 |
| Minimum contract duration | 10 years | 2025 and 2026 |
| Payout age | Between 60 and 75 years old | 2025 and 2026 |
| Maximum age to subscribe | Day before 65th birthday | 2025 and 2026 |
| Arriving during the year | Cap reduced for each full month you were not taxable in Luxembourg (a partial month of arrival does not reduce the cap, unlike home savings) | 2025 and 2026 |
| Capital payout or annual withdrawals | Taxed at half the global rate | 2025 and 2026 |
| Life annuity payout | 50% tax-exempt, the rest taxed normally | 2025 and 2026 |
| Early withdrawal (except serious illness or disability) | Taxed in full at the standard rate | 2025 and 2026 |
How to deduct your payments
Open an approved 111bis contract
With an insurance company or credit institution authorized in Luxembourg, or authorized in another European Union Member State and allowed to operate in Luxembourg (Guichet.lu). The Luxembourg sub-account of a Pan-European Personal Pension Product (PEPP), under Article 111ter, shares the same limit.
During the year: reduce your withholding tax
Resident: report your payments on Form 164 R to have them entered on your tax withholding card (the ACD document indicating your tax class to your employer). Married: the MyGuichet.lu procedure for tax rate simulation or individualization also allows you to declare them.
After the end of the year: annual adjustment or tax return
Annual adjustment (Form 163 R) if you are not required to file a tax return, otherwise an income tax return (Form 100), under the special expenses section. Attach the annual certificate from the insurer or bank. Assimilated cross-border worker: Form 100.
Before 31 December 2026 for your 2025 income
For 2025, €3,200 maximum. Your 2026 payments, up to €4,500, will be declared in 2027. If you are hesitant between the two options, read tax return or annual adjustment.
A worked example
Let's take Marc, 35, single, resident, with a 2026 taxable income of around €70,000: he falls into the 39% bracket of the tax scale applicable since 2025 (ACD). His insurance premiums already exceed the automatic €480 flat rate for special expenses, so every euro paid into 111bis counts extra. He contributes €375 per month, i.e., €4,500 in 2026.
- deductible payment: €4,500
- tax savings: 4,500 × 39% = €1,755
- with the employment fund contribution (7%): 1,755 × 1.07 = approx. €1,878
- actual cost: 4,500 - 1,878 = €2,622 for €4,500 saved
The same payment in 2025 would only have been deductible up to €3,200: approx. €1,335 in tax savings (3,200 × 39% × 1.07), and the extra €1,300 paid in would not have reduced anything.
What if Marc had no other special expenses? The first €480 would already be covered by the flat rate allowance: his additional deduction would drop to €4,020, representing about €1,678 in tax savings. At trigger, we often see this detail forgotten in savings calculations.
Common mistakes
- Confusing 111 and 111bis: Article 111 covers insurance (€672) and home savings (€672 or €1,344), while 111bis comes on top with its own separate cap. Details are in our deductions checklist and our home savings guide.
- Applying €4,500 to your 2025 income: for 2025, the cap is €3,200.
- Thinking that opening two contracts doubles the cap: the cap applies to all your payments combined.
- Forgetting the annual certificate from the insurer or bank.
- Terminating the contract before age 60 or before 10 years have passed: the entire refunded amount is then taxed at the standard rate.
Frequently asked questions
No. Since 2017, the cap is the same regardless of your age (€3,200 up to 2025, €4,500 from 2026). From 2002 to 2016, it increased with age, which explains the old tables you might still find online.
Yes, provided each spouse has a contract in their own name: even under joint taxation, the ACD calculates the cap individually for each spouse. For 2026, a married couple can therefore deduct up to €9,000.
Yes, and you can even open another contract elsewhere. However, savings already paid in remain in the first contract until maturity, and each contract must meet the minimum 10-year duration (ACD).
As a lump sum or annual withdrawals, at half the global tax rate, i.e. half of your overall tax rate (your tax liability divided by your adjusted taxable income, including the payout income), according to the ACD. As a monthly life annuity, half of the annuity is tax-exempt. All benefits remain subject to the long-term care insurance contribution (1.4%).