Private pensions with tax breaks

A private pension savings plan called a plan d’épargne retraite (Per) offers the benefit of tax deductibility for premiums.

This replaced ‘Loi Madelin’ contracts, previously used by self-employed workers and benefited from similar tax breaks, as well as plan d’épargne retraite populaire (Perp) contracts that were on offer also to ordinary members of the public.

Both of the previous schemes still exist, however, for those who took them out prior to October 2020.

The Per can, once you reach retirement age, be taken as regular income, a capital sum or a combination of the two. The Loi Madelin just provides an income. 

Per contributions in a given tax year can be deducted from taxable income year within ceilings. 

These ceilings vary depending on income levels and are worked out (for 2026 declarations of 2025 income) based on 2024 income as declared last year.

You can find the amounts on your avis d’impôt for 2025 income.

This year there are minimum and maximum ceilings of €4,710 and €37,680 (note that different rules apply to self-employed people).

This deduction is only for the purposes of income tax and not social charges.

Since the benefit of these deductions is based on a reduction of taxable income, you need to be paying a certain amount of tax already to benefit fully. 

However it could also mean you stay in a lower tax band. 

How money taken from the Per is declared and taxed varies depending on whether you take it as a regular income or as a capital sum, and whether or not you have claimed deductions from taxable income. 

If you do not apply deductions for your Per investments then, alternatively, there will be a greater tax advantage when you come to claim the pension.

Before taking out such policies it is advisable to check further as to exactly what they provide and when benefits are expected to be available.