Easily manage employment in Luxembourg

Payroll services in Luxembourg

Luxembourg has a strong economy with key industries in finance, technology, and logistics. With specific labor laws and tax regulations, employers in Luxembourg must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Luxembourg

Employers in Luxembourg must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Luxembourg’s minimum wage is EUR 2,570.93 per month for unskilled workers and EUR 3,085.12 per month for skilled workers.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Luxembourg is 40 hours, typically spread over five days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated at 140% of the regular wage for extra hours and 150% for work on public holidays.

Taxation and social security contributions

• Personal income tax: Luxembourg has a progressive income tax system with rates ranging from 0% to 42% depending on income levels.
• Employer contributions:
• Social security: Approximately 12.98% of the gross salary.
• Employee contributions:
• Social security: Approximately 12.45% of the gross salary.
• Corporate tax: The corporate income tax rate in Luxembourg is 24.94% (including municipal business tax and the solidarity surtax).
• Tax reporting: Employers must file payroll taxes and contributions with the Luxembourg tax authorities regularly.

Payroll compliance in Luxembourg

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions : Employers must ensure accurate deductions for social security and income tax.
• Employers must stay updated on changes to Luxembourg’s labor laws and tax regulations to avoid penalties.

Run payroll in Luxembourg with Remote

Managing payroll in Luxembourg requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.