Luxembourg encourages voluntary pension savings (3rd pillar) to complement the public pension system.
However, unlike many EU countries, these savings are taxed when paid out, which reduces their long-term effectiveness.
In practice:
• Several EU countries apply partial exemptions at maturity
• Others tax contributions rather than payouts
• Most aim for long-term predictability over 30–40 years
A public petition is currently addressing this specific tax treatment, arguing that it discourages participation in voluntary retirement savings.
Source / details:
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no_options_lux
1 comment
How does this differ from some of the large EU countries? A quick search of Germany and France looks like they have similar schemes, with France providing flexibility if it’s taxed on the way in or taxed on withdrawal. It seems reasonable that the money is taxed at some point.