On Tuesday 17 March 2026, Luxembourg’s Chamber of Employees (Chambre des Salariés - CSL) published information on a new tax allowance aimed at encouraging people to remain in employment.
The measure forms part of the law of 19 December 2025 on pension reform. Entering into force on 1 January 2026, this tax allowance seeks to motivate insured persons to postpone their take-up early old-age pension.
According to the CSL, the allowance for continuing to work (abattement de maintien dans la vie professionnelle - AMVP) tax deduction is granted upon formal request to any taxpayer who earns income from a professional activity and who meets the conditions for entitlement to an early old-age pension without exercising the corresponding right with the pension institution.
For the purpose of entitlement to the AMVP, tax law treats any income taxed as employment or self-employment income as qualifying income, noted CSL. This means that a person may receive a salary, monetary sickness benefits, paid parental leave, unemployment benefits or an early retirement allowance, and the law will recognise all of these as income from a professional activity that may give entitlement to the AMVP.
The law defines the eligibility criterion for an early old-age pension and requires the person not to exercise this right. It applies this condition exclusively to early old-age pensions that national legislation grants before the age of 65. The law lists these pensions clearly and exhaustively, and it includes early old-age pensions from the general scheme, the special scheme and the transitional special scheme.
The taxpayer must submit a formal request to receive the AMVP. They must attach a certificate from the competent pension fund, which for private-sector employees is the National Pension Insurance Fund (caisse nationale d’assurance pension - CNAP), to confirm that they qualify for an early old-age pension and have not claimed it. Applicants can request this certificate from the CNAP via MyGuichet.
The time needed to issue the certificate depends on the insured person’s career history and on how quickly the authority can access the required information.
To benefit from the allowance through withholding tax on wages and salaries, the taxpayer must ask their competent RTS office to correct their tax withholding card. They must complete form 164, tick box 322 for resident taxpayers or box 317 for non-resident taxpayers, and attach the CNAP certificate.
If the tax authorities do not apply the allowance through withholding tax, for example when the certificate is missing, the taxpayer can request it through a tax return or during the annual tax assessment.
The law sets the tax allowance for remaining in professional life at €9,000 per year. It calculates this amount at €750 per month during which the taxpayer meets the eligibility conditions. The law allows the taxpayer to receive the allowance from the month following the moment they meet the conditions for an early old-age pension. It also grants the full monthly amount for the month in which the taxpayer stops meeting these conditions.
The authors of the draft law introduced the monthly calculation to prevent individuals from receiving the full annual allowance when they extend their professional activity only slightly beyond the minimum requirement for early retirement.
According to the authors of the draft law, the monthly allocation of the AMVP is necessary to prevent the full annual allowance from being granted in cases where a professional activity is extended only slightly beyond the minimum requirement for early retirement.
The law does not adjust the allowance for part-time work. Lawmakers chose this approach to keep the system “clear, readable and easy [to apply]”.
