Employment taxes

• Income tax: Luxembourg has a progressive income tax system. Rates range from 0% to 45.78%, depending on your income and family situation.
• Employees are classified into tax classes (1, 1A, or 2) based on marital status and dependents.
• Social security contributions are shared between the employer and the employee. As an employee, you’ll typically pay around 12–13% of your gross salary toward health, pension, and unemployment insurance.
• Taxes are withheld directly from your monthly salary (PAYE system).

Leave policy

• Vacation: At least 26 paid days per year after 3 continuous months of work.
• Public holidays: 11 per year.
• Sick leave: 100% paid, covered by the employer for the first 77 days.
• Maternity leave: 20 weeks paid at 100% of the highest salary during the last 3 months before the leave, covered by social security.
• Paternity leave: 10 days, 100% paid. The first two days are covered by the employer, and the remaining 8 days are covered by the social security.
• Parental leave: Parental leave can last up to 6 months. It's available to both parents, and you can take it full-time, part-time, or split it into smaller chunks until the child turns six. Social security covers this leave, and the payment is calculated on the employee's pay based on their average salary from the previous 12 months.

Employment termination

Dismissals must be justified and provided in writing. Employment can end due to resignation, mutual agreement, redundancy, or misconduct.

Notice periods depend on how long you’ve been with your employer (from 2 weeks to 6 months).

Severance pay is based on your years of employment:

• 5–10 years: 1 month’s salary
• 10–15 years: 2 months’ salary
• 15–20 years: 3 months’ salary
• 20–25 years: 6 months’ salary
• 25–30 years: 9 months’ salary
• Over 30 years: 12 months’ salary

Hiring and contracts

• Written employment contract, signed before the first day, is mandatory.
• Contract must outline job role, salary, working hours, and start date. It can be in English.
• Probation periods can last up to 12 months, depending on the position.
• Types of contract: Permanent (open-ended), fixed-term, or part-time contract.

Payroll and salary payment

• Salaries are usually paid monthly, directly into your bank account.
• The national minimum wage (SMIC) is one of the highest in the EU: €2,570.93/month for unskilled workers and €3,085.11/month for skilled workers
• Pay slips must clearly show gross pay, deductions, and net pay.

Benefits

Mandatory:

• Health insurance
• Pension contributions
• Accident and unemployment insurance
• Annual leave
• Sick leave
• Maternity/Paternity/Parental leave

Optional (and common):

• Meal vouchers or lunch cards
• Private health insurance top-ups
• Company car or transport allowance
• Performance bonuses and training budgets

Monthly living cost (Luxembourg City Edition)

Luxembourg City is pricey. Here’s what to expect:

• Rent (1-bedroom in city center): €1,800–2,500
• Utilities: €200–300
• Groceries: €400–600
• Public transport: Free
• Leisure & dining: €250–400

Living just across the border (in France, Belgium, or Germany) is common and often cheaper.

How to get a local ID number

• Every resident and employee must have a 13-digit National Identification Number (matricule).
• It’s issued automatically when you register your residence or your employer declares your employment.
• Remote workers can also obtain one through registration with the Centre commun de la sécurité sociale (CCSS).

Social security registration

• Your employer handles your registration with the CCSS. This covers health insurance, pensions, unemployment, and accident protection.
• You’ll get a social security card used for healthcare and benefits.

Banking

Opening a bank account is simple once you have your residence certificate and ID. Popular banks include:

• BGL BNP Paribas
• Banque Raiffeisen
• Spuerkeess (BCEE)
• ING Luxembourg
• Post Luxembourg

Some banks offer special packages for newcomers, including multi-currency accounts.

Housing and rental process

• Rental contracts usually run for 1–3 years and must be in writing.
• Expect to pay 1–3 months’ rent as a deposit.
• Tenants have strong rights, landlords can’t evict without notice or valid reason.
• Most rentals are unfurnished, but fully equipped kitchens are common.

Healthcare system

• Luxembourg’s healthcare is top-tier. It’s public, mandatory, and funded by social contributions. You can choose your own doctor, and most expenses are reimbursed (80–100%).
• Many residents also take out private insurance for extras like dental or optical care.

Public transport

• Public transport (buses, trams, trains) is 100% free nationwide.
• You can drive with an EU driving license, while non-EU licenses can be exchanged after one year of residence.
• Roads are excellent, and parking is usually organized but can be tight in the city.

Emergency and important contacts

• Fire, police, ambulance - 112
• Missing children hotline - 116 000
• Medical on-call service - +352 8002 8080

Work permit and visa requirements

• EU/EEA/Swiss citizens: No work permit required. You only need to register your residence within 3 months.
• Non-EU citizens: You’ll need a work permit and residence authorization before arrival. Your employer usually applies for these on your behalf.
  After arriving, you must undergo a medical check and local commune registration.

Business culture and work norms

• Punctuality and professionalism matter. Meetings start on time.
• Multilingual workplaces are the norm - French, German, Luxembourgish, and English mix daily.
• Work-life balance is deeply respected. Many offices are empty by 6 p.m.
• Dress codes vary by sector - more formal in finance, relaxed in tech.