Paying your staff in Luxembourg can be complex if you’re not aware of all the specific rules and regulations. Outsourcing to a dedicated Luxembourg payroll service company like Bradford Jacobs will help you reduce costs and minimise risk and liablility.

Payroll Services in Luxembourg for Contractors

We offer a dedicated Luxembourg Payroll solutions specifically for contractors which can be tailored to meet your specific requirements- saving you time and money. The less time you spend thinking about Luxembourg payroll the more time you’ll have to concentrate on your business, so let our dedicated team of professionals handle it all on your behalf. Contact us today to find out how.

Payroll Services Luxembourg for Employers

  • Registration with the Luxembourg Tax Office.
  • Registration with the NSSO (National Social Security Office).
  • Creation of Employment Contracts.
  • Application of the Special Expatriation Status (if applicable).
  • Calculation of Monthly Salary and Creation of Pay slips.
  • Advice about the Available Tax Free Allowances.
  • Submitting of Wage Tax Returns and Forms for National Insurance.
  • Correspondence with Involved Parties.
  • Annual Accounts, Administration and Year End Statements.
  • Creating Payment Schedule for Wage Tax, National Insurances and Net Wages.
  • Personal Income Tax Returns.

Outsourcing your Luxembourg Payroll

Outsourcing your payroll can serve as a more cost-effective, simpler method of paying your employees and filing your wage tax returns on time and in full. By outsourcing your Luxembourg payroll, you can also benefit by gaining peace of mind knowing that you are paying the correct wage tax and social security obligations in full and on time.

You won’t have to worry about incurring tax penalties for late or incomplete filing and payment. Your company and your employees can focus solely on your business goals, without ever having to worry about the complexities of payroll management.

Working in Luxembourg: Luxembourg Income Tax

You can find the income tax rates for 2014 here, in relation to Luxembourg. This guide also covers the income tax base for residents and non-residents, allowable tax credits and deductions, the special expatriate tax regime, capital income tax rates and information on double-taxation treaties.

Income Tax Base For Residents and Non-Residents of Luxembourg

Residents of Luxembourg

Are subject to personal income tax on their total income, from all sources worldwide.

Non-residents of Luxembourg 

Are subject to personal income tax on sourced income from Luxembourg only.

Individuals will be regarded as tax residents if:

  • Their customary abode is in Luxembourg
  • Their centre of economic interests is in Luxembourg

Income Tax Rates for 2018

Amount  %age
Income tax is withheld at source:  40%
From EUR 0 to 11,265  0%
From EUR 11,265 to 13,173  8%
 From EUR 13,173 to 15,081  9%
 From EUR 15,081 to 16,989  10%
 From EUR 16,989 to 18,753   11%
 From EUR 18,754 to 20,625  12%
 From EUR 20,625 to 22,569  14%
From EUR 22,569 to 24,513 16%
From EUR 24,513 to 26,457  18%
From EUR 26,457 to 28,401 20%
From EUR 28,401 to 30,345 22%
From EUR 30,345 to 32,289 24%
From EUR 32,289 to 34,233 26%
From EUR 34,233 to 36,177 28%
From EUR 36,177 to 38,121 30%
From EUR 38,121 to 40,065 32%
From EUR 40,065 to 42,009 34%
From EUR 42,009 to 43,953 36%
From EUR 43,953 to 45,897 38%
From EUR 45,897 to 100,002 39%
From EUR 100,002 to 150,000 40%
From EUR 150,000 to 200,004 41%
EUR 200,004 and above 42%

Solidarity Surtax of 7% of taxes, or 9% for taxpayers earning more than EUR 150,000.

Allowable Deductions and Tax Credits

Subject to limitations, deductions are permitted for insurance premiums for life, accident, sickness; individual pension schemes; alimonies and annuities; childcare and housekeeping cost; charitable contributions; interest on personal and mortgage loans.

Special Expatriate Tax Regime

Luxembourg does not have a special expatriate tax regime for foreigners.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed

List of countries having a tax agreement with Luxembourg.

Withholding Taxes Dividends:

Dividends: 0/15%, Interest and Royalties: 0%

Bilateral Agreement

The United Kingdom and Belgium are bound by a double taxation treaty.

Filing Date

Tax returns are due by 31st of March of the following year..

Figures Based on Sources

Tax Authorities

Other Domestic Resources

Luxembourg Social Security

Whether a Resident or a Non-Resident, employees working in Luxembourg are required to pay social security contributions on their gross salary and all earnings within Luxembourg.

Social security contributions are deducted automatically at source from the salary, when employed through EAFS Consulting. Employees in Luxembourg will be subject to both employer and employee social security deductions.

Employer Social Security Rates for 2018:

  • 8.00% for pension insurance
  • 3.05% for health insurance
  • 0.90% for accident insurance
  • 0.11% for health at work insurance
  • 0.65% – 2.95% for mutual insurance

Employee Social Security Rates for 2018:

  • 8.00% for pension insurance
  • 3.05% for health insurance
  • 1.4% dependency insurance

The Social Security System in Luxembourg is managed by the CCSS, the Centre Commun de la Sécurité Sociale. (Social Security Office)

Contact us today and let our dedicated team of Luxembourg payroll professionals take care of everything for you.