Follow the guide to find out everything you need to know about tax-deductible insurance premiums in Luxembourg:

What is a deductible insurance premium?

What are the different types of deductible insurance premiums?

What are the deduction limits and ceilings for insurance policies?

How and when can insurance premiums be deducted from your taxes?

Who can deduct insurance premiums from their Luxembourg tax return?

The premiums of which insurance policies are non-deductible?

What other expenses are tax-deductible?

What mistakes should be avoided when declaring insurance premiums?

Deductible insurance premiums are contributions paid for certain insurance contracts. They can be used to reduce taxable income, providing a significant tax advantage. These deductible expenses in Luxembourg are specifically governed by tax legislation and may include premiums relating to pension provision, civil liability or life insurance.

Deductible insurance premiums must meet certain conditions to be eligible for deduction. They must concern the following insurance contracts:

Single and periodic premium life insurance

Premiums paid for life, death or disability insurance are deductible up to a certain limit, depending on your family situation.

The maximum deductible amount for these premiums depends on a number of criteria, including the age of the policyholder and the number of dependent children.

Example: A taxpayer aged 40 with no children can deduct a higher amount than a younger person, thanks to the progressive increase per year of age for single premiums.

These premiums are only deductible if the policies are taken out for a minimum of 10 years.

Civil liability insurance

These premiums, whether for your private life or your vehicle, are deductible.

Outstanding balance insurance

Whether the premiums are paid periodically or by a single  payment, they are deductible. If the outstanding- balance insurance was paid by a single premium for the acquisition of your main residence, the deductible amount will be increased.

Contributions to a complementary retirement savings plan

These premiums to prepare for your retirement are deductible up to a certain ceiling.
For complementary retirement savings plans, the contract must last at least 10 years, it must end after the insured’s 60th birthday and before the latter’s 75th birthday. Finally, the insured, the policyholder and the beneficiary at the end of the contract must be one and the same person.
 

Below are the various premium limits that you can deduct when you file your Luxembourg tax return.

Insurance premiums: life; death; accidents; disability; health; civil liability

(Article 111 LIR [Luxembourg income tax law] applicable)

Deductible ceiling for outstanding balance insurance paid by just one premium payment 

(Article 111 LIR [Luxembourg income tax law] applicable)

Deductible ceiling for complementary retirement-savings plans (111bis LIR applicable)

Since 2017, Luxembourg tax regulations (article 111bis lir) have set the maximum deductible amount per year and per taxpayer at EUR 3,200. The ceiling applies per tax year for the same person, even if you have taken out several pension policies. In all cases, the total deduction cannot exceed EUR 3,200.

You must declare all amounts paid for deductible insurance on your income tax return.

Make sure you have the tax certificates issued by your insurer, which include the deductible premiums.

In the case of insurance premiums: life; death; accident; disability; health; civil liability (article 111 LIR applicable), you can declare the various amounts in section B.b Insurance premiums and contributions under the heading “special expenses” on page 14 of the tax return.

Please note that even if the total amount paid exceeds the maximum deductible that depends on your family situation, the amount taken into account for the tax declaration will be the maximum deductible amount.

For example: a married couple with 2 children can deduct a maximum of 2,688 euros in premiums.

In the case of single-premium outstanding balance insurance, the amount must be declared in section B.b Insurance premiums and contributions, under the heading “special expenses”.

The maximum deductible amount depends on your family situation.

For example, a 33-year-old with 1 child can deduct up to 8,352 euros in one go. 

For a complementary retirement savings plan, the amount of the premiums must be declared in section D, under the heading “special expenses”, on page 15 of the tax declaration complementary retirement savings plan for the category. The maximum deductible amount per year and per taxpayer is 3,200 euros.

You will need to provide proof of payment of the insurance premiums.

You can always ask your agent or accountant for help if you find this too complex.

The tax return for the previous tax year must be filed by 31.12 each year at the latest. The tax return for 2022 must therefore be submitted to the tax authorities by 31.12.2023 at the latest.

Any resident who files a tax return in Luxembourg can deduct the insurance premiums from his/her tax return. Similarly, any non-resident who has chosen to file a tax return in Luxembourg may deduct the insurance premiums.

Some insurance policy premiums, although significant expenses, are not deductible from your taxable income. This applies in particular to insurance premiums covering risks such as theft, fire, glass breakage, material damage and legal expenses. Premiums for fully comprehensive car insurance also fall into this category.

Many other expenses are also deductible from your taxable income including :

• costs associated with the loan of your main home
• interest charges relating to the purchase of a property under construction or renovation
• interest charges on a personal loan
• contributions to a home savings contract
• personal contributions to a supplementary pension scheme set up by your employer
• donations or gifts
• childcare and cleaning costs