Article 111bis L.I.R.: Complete Guide to Luxembourg’s Pension Savings Scheme
Article 111bis of the amended law of 4 December 1967 on income tax (L.I.R.) governs Luxembourg’s individual pension savings scheme, also known as the 3rd pillar of retirement provision. Since 1 January 2026, the tax deduction ceiling has been set at €4,500 per year per taxpayer (previously €3,200 until 2025), enabling residents and assimilated cross-border workers to build supplementary retirement savings whilst significantly reducing their taxable income.
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Compare pension savings →What is Article 111bis L.I.R.?
Article 111bis of the income tax law (L.I.R.) sets out the legal and tax framework governing individual pension savings contracts in Luxembourg. Introduced into Luxembourg law in 1991 and substantially reformed in 2002, 2017 and 2026, this scheme forms the third pillar of the Luxembourg retirement system, complementing the statutory pension (1st pillar, CNAP) and occupational supplementary schemes (2nd pillar, law of 8 June 1999).
In practical terms, a 111bis contract is a pension life insurance policy offered by an authorised insurance company, enabling the policyholder to build up a retirement lump sum or annuity whilst benefiting from a tax deduction on contributions under the special expenses category. The scheme is strictly regulated: minimum duration, subscription age, contribution terms, permitted investment products and tax treatment at maturity are all defined by law and its implementing regulations.
In Luxembourg, this scheme is officially referred to as prévoyance-vieillesse (official term) or épargne pension in everyday usage. Do not confuse it with the French « PER », « PERP » or « Article 83 » — these are French retirement products with no direct equivalent in Luxembourg. Article 111bis is specific to the Luxembourg tax system and is the sole legal framework for individual 3rd-pillar savings in the Grand Duchy.
Luxembourg’s three-pillar retirement system
Luxembourg structures its retirement system around three complementary pillars:
| Pillar | Type | Legal basis | Key feature |
|---|---|---|---|
|
1st pillar
Statutory pension
|
Compulsory | Caisse Nationale d’Assurance Pension (CNAP) | Pay-as-you-go public pension — Replacement rates among the highest in Europe, though projected to decline according to CNAP forecasts |
|
2nd pillar
Occupational scheme
|
Occupational | Law of 8 June 1999 (L.R.C.P.) | Set up by the employer — Employee’s personal contribution deductible up to €1,200/year |
|
3rd pillar
Individual pension savings
|
Voluntary | Article 111bis L.I.R. | Individual initiative — Contributions deductible up to €4,500/year per taxpayer since 2026 |
Sources: CNAP, Tax Administration — Pension savings — June 2026.
The 3rd pillar supplements the first two by enabling anyone to build up additional capital flexibly, within an attractive tax framework. Unlike the 2nd pillar (which is employer-linked), a 111bis contract is fully portable: you choose your insurer, your contribution amounts and your risk profile, and keep your contract even if you change employer or sector. It is also the only pillar directly accessible to cross-border workers, subject to tax assimilation status.
History and developments of the 111bis scheme
Luxembourg’s pension savings scheme has undergone several reforms since its creation. Understanding this evolution helps to grasp the current issues and the direction taken by lawmakers in favour of individual supplementary savings.
Timeline of reforms
| Year | Development | Impact |
|---|---|---|
| 1991 | Introduction of Article 111bis | Creation of the individual pension insurance scheme — life annuity only at guaranteed statutory rate, limited deductible ceiling (graduated by age) |
| 2002 | Major reform | Opened to credit institutions — partial lump-sum withdrawal permitted — investments in diversified funds authorised — favourable exit tax (half global rate) — creation of the modern pension savings framework |
| 2002–2016 | Age-graduated ceilings | Staggered deduction: maximum amount increasing with policyholder’s age |
| 2017 | Tax reform | Uniform ceiling of €3,200 for all ages — 100% lump-sum withdrawal authorised |
| 2022 | Regulatory reform + introduction of Art. 111ter | Removal of investment restrictions — Creation of the PEPP (pan-European pension product) via Article 111ter L.I.R. — Circular L.I.R. no. 111bis/1 of 27 April 2022 |
| 2026 | Pension reform | Ceiling raised to €4,500 — Pension contribution increased to 25.5% — Stronger incentives for private supplementary savings |
Sources: Legilux, Law of 17 December 2021 (Mémorial A — No. 906), Ministry of Finance, Circular L.I.R. no. 111bis/1 of 27 April 2022 — June 2026.
The 2026 reform marks a significant turning point. The increase from €3,200 to €4,500 (+40.6%) comes against a backdrop of demographic ageing and rising pension contributions. The Luxembourg government is clearly encouraging workers to build up their private savings to supplement the statutory pension. For a taxpayer in the 42% marginal tax bracket, the higher ceiling translates into an additional tax saving of around €546 per year — or over €5,000 over ten years.
The reform follows a dual logic: preserving the financial balance of the statutory scheme whilst maintaining its attractiveness. Luxembourg chose not to raise the statutory retirement age (65), but increased pension contributions to 25.5% in 2026 (split equally: 8.5% employee, 8.5% employer, 8.5% State), and has significantly enhanced the appeal of private savings via Article 111bis. This contribution trajectory is expected to remain in place until 2032 according to current projections.
The €4,500 deduction ceiling: calculation and optimisation
Since 1 January 2026, the tax deduction ceiling for 111bis contracts is set at €4,500 per year per taxpayer. This amount, independent of age and family situation, represents the maximum deductible contributions under the special expenses (SE) category for pension savings.
How the ceiling applies
Individual ceiling
Each taxpayer has a ceiling of €4,500 per year, regardless of how many contracts they hold. If you have several 111bis contracts, the total of all annual contributions must not exceed €4,500 to benefit from the full deduction. Contributions above this threshold are permitted but generate no tax benefit.
Couples: up to €9,000 combined
Spouses taxed jointly can each deduct €4,500 if each holds their own individual contract in their own name. The ceiling is not doubled if only one spouse contributes to a single contract. Two separate contracts (one per spouse) allow the household to maximise the tax benefit up to €9,000 per year.
Pro-rata for partial years
If you were not subject to Luxembourg tax for the full fiscal year (arrival mid-year, partial expatriation), the ceiling is reduced in proportion to the months of tax liability. Example: 9 months of tax residence in Luxembourg = (4,500 / 12) × 9 = €3,375 deductible.
Combined with the 2nd pillar
The 111bis ceiling (€4,500) is separate and can be combined with personal contributions to an occupational supplementary scheme (2nd pillar), deductible up to €1,200/year. An employee benefiting from both schemes can potentially deduct up to €5,700 per year in retirement savings.
The €4,500 ceiling applies to contributions made during the fiscal year, not to the total capital accumulated over the life of the contract. There is no cap on the total savings you can build up in your 111bis contract. Only the annual €4,500 benefits from the tax deduction; additional contributions are permitted but are not deductible and fall outside the tax framework of Article 111bis.
Examples of tax savings by profile
The tax saving achieved depends on your marginal tax rate. By deducting €4,500 from your taxable income, you reduce your tax base and therefore the tax owed. The following are indicative estimates for 2026, based on the Luxembourg progressive tax scale:
| Profile | Taxable income | Marginal rate | Annual contribution | Estimated tax saving |
|---|---|---|---|---|
|
Young professional
Single, age 28
|
€35,000 | ~28–32% | €2,000 | ~€560–640 |
|
Manager
Married, class 2
|
€70,000 | ~36–40% | €4,500 | ~€1,620–1,800 |
|
Senior executive
Single, age 45
|
€95,000 | ~41–42% | €4,500 | ~€1,845–1,890 |
|
Working couple
2 individual contracts
|
€120,000 (household) | ~41–42% | €9,000 (2 × €4,500) | ~€3,690–3,780 |
Indicative estimates based on the Luxembourg progressive tax scale for 2026. Marginal rate varies according to tax class, personal deductions and other income. These figures do not constitute tax advice. Please consult an adviser or the Tax Administration for a personalised estimate.
Optimise your tax position from June 2026 — Compare pension savings contracts and make the most of the new €4,500 ceiling to reduce your tax bill and prepare for retirement.
Compare contracts →Eligibility conditions and contract constraints
To benefit from the tax deduction under Article 111bis, the contract must comply with a strict framework defined by law and its implementing regulations — in particular the Grand-Ducal Regulation of 25 July 2002 (as amended in December 2021) and Circular L.I.R. no. 111bis/1 of 27 April 2022. These conditions ensure that the savings are genuinely intended for retirement.
Mandatory contract conditions
| Condition | Requirement | Details |
|---|---|---|
| Minimum duration | ≥ 10 years | Mandatory to benefit from the tax deduction. Suspending contributions does not terminate the contract and does not reset the clock. |
| Age at subscription | Before age 65 | Deadline: before the 65th birthday. After this age, it is no longer possible to take out a new 111bis contract. |
| Age at withdrawal | Between 60 and 75 | Benefits are payable from age 60 at the earliest and age 75 at the latest. The insured must be the policyholder. |
| Contributions | Flexible | No minimum amount prescribed by law. Frequency (monthly, quarterly, annual) and amounts are agreed with the provider. Top-up contributions are permitted at any time. |
| Withdrawal options | Capital, annuity or mixed | Since 2017: 100% lump sum, 100% life annuity, partial withdrawals or a combination — policyholder’s choice at maturity. |
| Early surrender | Prohibited except in specific cases | Permitted in cases of serious illness or disability (tax benefits retained). In other cases: tax at full rate and possible recovery of past deductions. |
| Authorised providers | CAA or EU | Insurance companies authorised in Luxembourg by the Insurance Supervisory Authority (CAA) or in another EU member state. |
| Investment options | Unrestricted since 2022 | Investment restrictions removed by the Grand-Ducal Regulation of December 2021. Funds, unit-linked, guaranteed rate and mixed options all permitted. |
Sources: Circular L.I.R. no. 111bis/1 of 27 April 2022, Guichet.lu — Pension savings — June 2026.
A 111bis contract is highly flexible to manage: you can suspend contributions at any time without penalty and resume them whenever you wish. The contract remains active and your savings continue to compound. The only real constraint is the minimum duration of 10 years between subscription and withdrawal, and the withdrawal age (between 60 and 75).
Permitted early surrender cases
The law provides for specific situations allowing early access to savings before the normal maturity date, without any tax penalty:
Serious illness or disability of the policyholder: early surrender is permitted and retains the same tax benefits as a normal maturity withdrawal (half global rate for capital, 50% exemption for the annuity). No recovery of past deductions is required. The exact conditions are defined by the Grand-Ducal Regulation on Article 111bis L.I.R.
Death of the policyholder: the accumulated savings are paid to the beneficiaries named in the contract. The applicable tax rules (potential inheritance tax) depend on the relationship between the deceased and the beneficiaries, as well as their country of residence.
Any early surrender outside the cases expressly authorised by law results in taxation at the full rate on the amount recovered (not at the half global rate) and may trigger recovery of the tax benefits obtained in previous years. The tax cost of such a surrender can be very high and may entirely cancel out the accumulated advantage.
In all cases, benefits from a 111bis contract are subject to the long-term care insurance contribution (1.4% in 2026), regardless of the form of payment (capital, annuity or authorised early surrender). This is a Luxembourg-specific feature: the long-term care contribution applies to replacement income and supplementary pensions.
Access to Article 111bis for cross-border workers
Cross-border workers residing in France, Belgium or Germany and working in Luxembourg can benefit from the 111bis scheme. Access is not automatic: it is conditional on obtaining tax assimilation status under Article 157ter L.I.R., which allows the cross-border worker to be treated as a Luxembourg tax resident for the year in question.
Eligibility conditions by country of residence
| Country of residence | Income condition | Legal basis | Note |
|---|---|---|---|
🇫🇷 France |
≥ 90% of worldwide professional income taxable in Luxembourg | Art. 157ter L.I.R. | Or foreign income < €13,000 net taxable. New Franco-Luxembourg tax treaty applicable since 2024. |
🇧🇪 Belgium |
≥ 50% of household professional income taxable in Luxembourg | Art. 157ter L.I.R. | More favourable threshold for Belgian residents. Assessed at household level (couple). |
🇩🇪 Germany |
≥ 90% of worldwide professional income taxable in Luxembourg | Art. 157ter L.I.R. | Or foreign income < €13,000 net taxable. |
Sources: Tax Administration, Guichet.lu — June 2026.
Tax assimilation does not happen automatically. You must request it explicitly in your Luxembourg tax return (Form 100) and provide evidence of your worldwide income. Once assimilated, you benefit from the same deductions as a Luxembourg resident (111bis, home savings, family expenses) but must declare all your worldwide income in Luxembourg for the year in question.
Practical examples
French cross-border worker, single
Luxembourg salary: €65,000. French rental income: €8,000 net. Luxembourg share: 65,000 / 73,000 = 89% (90% threshold not met). However, foreign income < €13,000 → eligible by exception. He can request assimilation and deduct €4,500 under Article 111bis.
Belgian couple (husband works in Luxembourg)
Luxembourg salary: €70,000. Wife’s salary in Belgium: €40,000. Household total: €110,000. Luxembourg share: 70,000 / 110,000 = 63.6%. Eligible (50% threshold exceeded). Each may open an individual 111bis contract — the husband for his share of income, the wife if she is also a Luxembourg taxpayer through assimilation.
German cross-border worker with mixed activity
Luxembourg activity: €55,000. German activity: €25,000. Total: €80,000. Luxembourg share: 68.75%. Foreign income: €25,000 (>€13,000). Not eligible (neither the 90% threshold nor the <€13,000 exception is met). He cannot access Article 111bis in this situation.
For French cross-border workers, the new Franco-Luxembourg tax treaty of 2018 has been fully applicable since 2024 income (declared in 2025). This treaty changed the method of eliminating double taxation: Luxembourg income is now declared in France at its gross amount (without deducting the tax paid in Luxembourg), which may increase the French tax rate for households with mixed income (France + Luxembourg). This change does not directly affect eligibility for Article 111bis or the tax benefits in Luxembourg, but may alter the overall analysis of net advantage depending on your situation. A personalised assessment with a cross-border tax adviser is strongly recommended.
Tax treatment: contributions and withdrawals
The tax treatment of Article 111bis has two stages: the contribution phase (deduction of contributions) and the withdrawal phase (taxation at maturity). This is a deferred taxation scheme: you save tax today on your contributions, and pay reduced tax tomorrow on the benefits received — at a point when your income is likely to be lower than during your working years.
Tax treatment at entry (contributions)
Contributions to a 111bis contract are deductible from your taxable income up to €4,500 per year under the special expenses (SE) category. They are declared on the corresponding line of Form 100 (Section D — Special Expenses). In practical terms, if you earn €70,000 in taxable income and contribute €4,500 to your 111bis, your tax base falls to €65,500. Returns generated within the contract accumulate tax-free — they are not taxed annually but only upon withdrawal.
Tax treatment at exit (maturity)
At the normal maturity of the contract (between ages 60 and 75), you recover your savings as a lump sum, a life annuity or a combination. The tax treatment is significantly more favourable than the standard rate:
💰 Lump-sum withdrawal
- Taxed at the half global rate (extraordinary income regime, Art. 111bis para. 2 L.I.R.)
- Treated as extraordinary income (Art. 132 §2 no. 5 L.I.R.)
- Effective rate approximately 10% to 21% depending on income level (vs 30–42% at full rate)
- 100% of capital can be recovered in a single payment (since the 2017 reform)
- Long-term care contribution (1.4%) applies to the capital paid out
📅 Life annuity
- 50% of the annuity amount is exempt from tax (Art. 115 no. 14a L.I.R.)
- The remaining 50% is taxed at the normal rate as pension income (Art. 96 L.I.R.)
- Flat-rate allowance of €300/year on all pensions and annuities received
- Long-term care contribution (1.4%) on the annuity amount, after deducting an allowance equal to ¼ of the SSM (≈ €676/month in 2026)
- Annuity payable monthly, for life
Sources: Tax Administration — Pension savings, ACD — Half global rate — June 2026.
Available products and main providers
Since the regulatory reform of 2022 (Grand-Ducal Regulation of 17 December 2021), the investment restrictions that previously constrained 111bis contracts have been removed. Providers can now offer a wide range of options: from guaranteed rates to 100% equity funds, ETFs, ESG/sustainable funds, or mixed contracts combining capital guarantees with unit-linked components.
The main authorised companies in Luxembourg
The Luxembourg pension savings market is primarily concentrated among several authorised insurers and banking institutions. Below is an overview of the providers whose product information we have been able to verify:
| Provider | Product | Key features |
|---|---|---|
|
LALUX
easyLIFE Pension
|
2 distinct options | Security — Protected capital, guaranteed rate 0% + profit-sharing (2.25% allocated in 2024). Sum of premiums paid guaranteed if duration ≥ 10 years. Performance — 11 unit-linked funds, 9 of which are ESG-labelled (SFDR Art. 8 or 9), with free switching between funds. |
|
Foyer Vie
horizon
|
Unit-linked + protected capital | 6 unit-linked funds managed by CapitalatWork Foyer Group (ESG Bonds, ESG Equities, Contrarian Equities, Defensive, Balanced, Dynamic) + money market fund. Protected capital option available for up to 50% of contributions. Profit-sharing rate of 2.25% allocated in 2024 (indicative, variable each year). |
|
AXA Assurances Vie
MySmartPension
|
Guaranteed rate + horizon-based unit-linked funds | Combination of guaranteed rate (AXA Pension Serenity, rate 1.25%) + unit-linked funds (AXA PENSION SICAV with target-date compartments: 2027-2029, 2030-2032, 2033-2035, 2036-2038, 2039-2041, 2042-2044, 2045-2047, Long Term, Future). Progressive security switching available. Reversionary annuity to spouse option. |
|
Baloise Vie Luxembourg
Pension Plan
|
3 management options | Managed (BFI Strategy funds managed by Baloise Asset Management), Profiled (Amundi ETFs based on defensive/balanced/dynamic profile) and Self-directed (selection from ETFs and funds including MSCI World, S&P 500, Emerging Markets, bond funds, ESG). Guaranteed rate compartment available. |
Sources: Official product information sheets — LALUX, AXA, Foyer Vie, Baloise Vie Luxembourg. Other providers also offer 111bis contracts in Luxembourg — see our comparison tool for a full market overview. June 2026.
Each provider issues an annual tax certificate showing contributions made during the year. This document is mandatory for claiming the deduction in Form 100. It is generally sent automatically at the start of the year for the preceding tax year.
Tax declaration: how to declare your 111bis
To benefit from the tax deduction, you must declare your 111bis contributions in your Luxembourg income tax return. The process is straightforward but requires certain formalities for the Tax Administration (ACD) to validate the deduction.
Declaring contributions (savings phase)
111bis contributions are declared in Section D « Special Expenses » of Form 100 (residents) or Form 100NR (assimilated non-residents), on the line dedicated to pension savings. You must state the total amount of premiums paid during the fiscal year and attach the tax certificate(s) issued by your provider. This document certifies that the contract complies with Article 111bis and states the exact amount contributed.
The annual tax certificate is essential. Your insurer sends it to you automatically at the start of the year for the preceding tax year. Without this document, the ACD may refuse the deduction. Keep it safe and attach it to your tax return.
Declaring benefits at contract maturity
When you recover your 111bis savings at maturity (between ages 60 and 75), you must also declare this benefit in your tax return:
Lump-sum withdrawal: to be declared in the extraordinary income section of Form 100. The half global rate will be applied by the ACD on this basis.
Life annuity: to be declared in the « Net income from pensions or annuities » section. The 50% exemption and the flat-rate allowance of €300/year will be applied. Your provider will supply the summary documents needed for this declaration.
In all cases, the long-term care insurance contribution (1.4%) is either deducted directly by the provider from the amount paid or calculated separately in accordance with the rules in force.
How to choose your 111bis contract: key criteria
Choosing a 111bis contract is a long-term decision that will commit your savings for 10 to 40 years. There is no one-size-fits-all solution, but rather an offer tailored to your situation, risk profile and financial objectives. Here are the key criteria to assess when making the right choice.
Risk profile and investment horizon
The younger you are and the further you are from retirement, the more you can afford a dynamic allocation (equity funds, ETFs) to maximise long-term returns. Conversely, if you are approaching 55–60, prioritise security (guaranteed rate, progressive securing, defensive funds). General rule: the longer the horizon, the more volatility you can afford in pursuit of higher returns.
Capital guarantee vs growth potential
Do you want the certainty of recovering at least your contributions (guaranteed or protected capital) or are you willing to accept the risk of a loss in exchange for greater growth potential? Guaranteed-rate contracts offer security and discretionary profit-sharing, whilst unit-linked contracts aim for potentially higher long-term performance, without a capital guarantee.
Management fees and charges
Compare fees carefully: entry charges (on each contribution), annual management fees (deducted from the fund value), switching fees (changing funds), and any early exit charges. Over 30 years, one additional percentage point in annual fees can significantly reduce your final capital. Ask for and read the official product information sheet for each product, which sets out all applicable charges.
Range and quality of investment options
Analyse the fund range available: number of funds, managers (in-house or external), historical performance, access to ETFs, ESG/sustainable funds, target-date compartments. A contract offering a wide range of options will allow you to adjust your allocation throughout the life of the contract as markets evolve and your situation changes.
Management style offered
Discretionary management: the insurer automatically adjusts allocation based on your age and target retirement date (ideal if you prefer not to manage it yourself). Profiled management: you choose a risk profile (defensive, balanced, dynamic) and the allocation is set accordingly. Self-directed: you build your own allocation from the available funds and manage switches yourself (for experienced investors).
Death benefits
In the event of death before maturity, virtually all 111bis contracts pay the accumulated savings to the named beneficiaries. Some contracts offer specific options (reversionary annuity to spouse, free nomination of beneficiaries). Check the general terms and beneficiary clauses according to your family situation.
Financial strength and service quality
For a 10- to 40-year contract, the financial strength of the insurer is a fundamental criterion. All Luxembourg providers are supervised by the CAA (Insurance Supervisory Authority) and subject to Solvency II. Beyond financial stability, assess customer service quality, ease of access to information (online portal, mobile app) and the provider’s responsiveness.
Frequently asked questions about Article 111bis
What is the difference between Article 111 and Article 111bis L.I.R.?
Article 111 L.I.R. covers standard life, death, disability and illness insurance, with a deduction ceiling of €672 per person in the tax household per year. Article 111bis L.I.R. specifically governs pension savings (supplementary retirement) with a ceiling of €4,500 per taxpayer since 2026. The two articles are separate and can be combined: you can deduct up to €672 under Article 111 and up to €4,500 under Article 111bis, within their respective special expenses categories.
Can I take out a 111bis contract if I already have an occupational pension scheme (2nd pillar)?
Yes, absolutely. The 3rd pillar (111bis) is entirely independent of the occupational 2nd pillar. Even if your employer contributes to a supplementary scheme on your behalf (law of 8 June 1999), you can take out one or more 111bis contracts in your own name at the same time. Both schemes can be combined and each offers its own tax benefit: up to €1,200 deductible for your personal 2nd-pillar contribution, and up to €4,500 for Article 111bis.
What happens if I contribute more than €4,500 to my contract in a year?
You are free to contribute more than €4,500 to your 111bis contract (there is no legal ceiling on contributions), but only the first €4,500 per year qualifies for the tax deduction. Contributions above this amount continue to accumulate in your contract and generate returns, but with no tax benefit on entry. At withdrawal, the favourable tax treatment (half global rate, 50% annuity exemption) still applies to all amounts received regardless of their origin.
Can I transfer my savings from one 111bis contract to another?
According to the official product information sheets of several Luxembourg providers, transferring accumulated savings from one 111bis contract to another is not permitted under the current Luxembourg regulatory framework. However, you can open a new 111bis contract with a different provider for future contributions at any time, whilst keeping your existing contracts until their respective maturities. Check the specific terms with your provider.
Can I suspend my contributions for a few years?
Yes. One of the main advantages of a 111bis contract is its flexibility: you can suspend contributions at any time without penalty and resume them whenever you wish. The contract remains active, your accumulated savings continue to grow, and all your rights are preserved. The only legal constraint is the minimum duration of 10 years between taking out the contract and withdrawing the savings, and the withdrawal age between 60 and 75.
What happens to my 111bis contract if I relocate outside the EU?
If you relocate outside the European Union, you have two options. First, keep your contract: most Luxembourg providers will accept this. The contract continues to operate and you can recover your savings at maturity between ages 60 and 75. Bear in mind that the tax treatment at withdrawal will depend on your country of residence at that time — Luxembourg’s tax benefits (half rate, annuity exemption) generally apply only to Luxembourg residents. Second, request an early surrender, which results in full-rate taxation and the loss of past tax benefits. Consult your provider and a specialist tax adviser before relocating abroad.
What is the difference between Article 111bis and the PEPP (Article 111ter)?
The PEPP (Pan-European Personal Pension Product) was introduced in Luxembourg via Article 111ter L.I.R. in 2022. It offers the same tax regime as Article 111bis (€4,500 ceiling, same entry and exit benefits) but is designed to be portable across the European Union: if you move to another member state, your PEPP can potentially follow you. The standard 111bis is linked to the Luxembourg tax framework. In practice, the PEPP market in Luxembourg remains underdeveloped in 2026 and Article 111bis remains the dominant standard.
Are the returns generated within my contract taxed each year?
No. This is one of the structural advantages of Article 111bis: interest, capital gains and returns generated within your contract are not taxed during the accumulation phase. They compound tax-free. Tax is only payable on withdrawal (at maturity), on the capital or annuity received, and at a reduced rate (half global rate or 50% exemption for the annuity). This deferred compounding mechanism is particularly advantageous over long periods.
Can I hold several 111bis contracts at the same time?
Yes, the law expressly permits this. You may take out as many 111bis contracts as you wish, with one or more providers. This can allow you to diversify your investment options (one secure contract and one growth-focused contract, for example) or benefit from the offerings of several insurers. The only constraint is that the €4,500 deduction ceiling applies to the total of all your annual contributions, regardless of the number of contracts.
Are my 111bis savings protected if the insurer becomes insolvent?
Contracts taken out with CAA-authorised insurers benefit from the protection framework provided by Luxembourg insurance legislation (Solvency II) and the protected liquidation mechanism for policyholders’ assets. Luxembourg also operates an asset segregation system for assets representing commitments to policyholders. All market participants are subject to strict prudential supervision by the CAA. For contracts taken out with banking institutions, unit-linked fund units are generally held off the bank’s balance sheet. Check the specific conditions with your provider.