Employment in Luxembourg is governed by strict laws and regulations, while it offers considerable advantages to the employee.
When a contractor decides that he/ she does not wish to become self-employed, for any reason (lack of time, lack of willingness, lack of a bachelor degree, lack of an EU/EFTA passport…), then becoming employed is the ideal solution.
This solution is open to all nationals, whether they are high school or university graduates and it is easy to implement, leaving the administrative burden on the employer’s shoulders.
An employee in Luxembourg enjoys a very high standard of social security protection, a fair tax system and a 2.5% annual indexation of gross salaries. This annual indexation is always decided by the Luxembourgish government in correlation with the inflation. Last time it was adjusted was in 2013 and now it was decided that it would be adjusted as of January 2017.
In order to be an employee in Luxembourg, one does not necessary need to be a resident in the country. Frontaliers, cross-border workers, may reside in any one of the three adjacent countries: Germany, Belgium, or France. This means lower housing costs for them but longer commuting times. At the same time, they are paying taxes in Luxembourg for their income generated there but not for their worldwide income, as they are non-residents. This, depending on the taxation rates back home, can have an impact on their net earnings if they have to declare income from different sources apart from their salaries. Employees are taxed at source and have to fill out a tax return by the 31st of March of the year that follows the tax year. The fiscal year in Luxembourg is the calendar year, from 1st of January to the 31st of December.
Contributing to the Luxembourgish social security system, being a resident means that the child benefits are paid by Luxembourg in all cases. When a worker is a frontalier, then if both parents are working in Luxembourg or if someone is a single parent and is working in the country, the child benefits are exportable and paid by Luxembourg. If only one of the parents is working in Luxembourg and the other one is working in the border country, the child benefits are paid by the border country. If there is a difference in the payments, Luxembourg will cover the difference.
For all the above-cited reasons, it becomes clear that being an employee in Luxembourg is an advantageous solution to anyone not wishing, or not being in a position to become self-employed. Hence, being the experts in Luxembourgish employment, Tenebras Sàrl is here to assist you in working on your project free of worries, free to pursue your dreams.
If you want to find out more, please contact me: