Employing in Luxembourg

Luxembourg, a vibrant financial hub in the heart of Europe, presents a compelling opportunity for businesses looking to expand. Its strategic location, multilingual workforce, and favourable economic environment make it an attractive destination for international companies. The country's diverse and skilled labor market, combined with its strong focus on innovation and technology, provides a fertile ground for growth and development. 

TopSource Worldwide offers comprehensive services in Luxembourg, assisting businesses with navigating the complexities of local employment laws, payroll management, and ensuring compliance with regulations. Our expertise in the Luxembourgish market ensures seamless integration for businesses aiming to establish or grow their presence in this dynamic environment.

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Our Expertise

Managing a global workforce in Luxembourg

Managing a workforce in Luxembourg involves navigating a landscape shaped by a multilingual environment and a diverse cultural fabric. The country's robust labour laws emphasise fairness and employee welfare, necessitating a meticulous approach to compliance and employee management. TopSource Worldwide offers tailored EOR solutions for workforce management in Luxembourg, covering everything from payroll processing and tax compliance to employee benefits administration, all aligned with local laws and customs.

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Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

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Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

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Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success. 

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Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

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Global Employee Cost Calculator

Estimate the cost of your new hire with our calculator. Simply enter their location and salary information in to this handy tool to see what will be spent in employment costs each month.

Employment Cost Calculator

Luxembourg
British Pound
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Luxembourg

British PoundEuro
Base Salary (per month)£7,052.09€8,238.23
Local employer's costs£0.00€0.00
Total Cost (Annual)£84,625.03€98,858.79
Hiring in Luxembourg

Please note - the above costs are an estimate, and the actual amount may differ based on a number of variables.

Additional setup and management fees may apply.

TESTIMONIALS

Hear from our clients about our EOR solutions in Luxembourg

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven
Nutreco

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar
Sungard

”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

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Client based in Ft Worth, Texas, USA
GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Luxembourg

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Luxembourg. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Luxembourg-based employees.

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End-to-end Luxembourg payroll services

Looking to expand into Luxembourg? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Luxembourg expansion initiatives.

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Global entity management

Venturing into the Luxembourg market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

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Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

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Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Luxembourg

Entering the Luxembourg market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Luxembourg.

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Luxembourg Insights

Key insights into Luxembourg's landscape

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VAT rates: Luxembourg has a standard VAT rate of 17%, with reduced rates of 14%, 8%, and 3% for specific goods and services.

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Ease of Doing Business rank: Luxembourg ranks 52nd in the World Bank's Ease of Doing Business Index, indicating a moderately favourable business environment.

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Consumer Confidence Index: As of 2022, Luxembourg's Consumer Confidence Index was 89.3, reflecting stable economic sentiment.

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Employee maternity/paternity leave: Maternity leave is 16 weeks, and paternity leave is 2 weeks, emphasising work-life balance and parental support.

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Employee termination period: Standard notice for termination varies but is typically 1 to 3 months, depending on employment contract terms and duration.

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Employee salary pay date: Wages are generally paid monthly, with specific pay dates outlined in employment contracts and subject to labour laws.

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Bank holidays: Luxembourg observes public holidays, including New Year's Day, National Day, and Christmas, with a total of around 10 public holidays in a year.

An Overview of Statutory Benefits on the Luxembourg

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Pension

Luxembourg’s pension system is built on a number of pillars. The public tier state pension, as well as occupational and personal pensions, are included in the system. These funds are under the management of the Caisse Nationale d’Assurance Pension (CNAP).

Luxembourg’s state pension (Pension de Vieillesse / Altersrente) can be claimed by workers in full or in part. The amount they receive is determined by the number of years they have paid into social security by the time they turn 65. This is the age at which people in Luxembourg can begin receiving their state pensions.

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Sickness pay

Employees in Luxembourg can self-certify illness for two days, but must then seek a medical note for illnesses that last more than three days. For long term sickness, the employer is responsible for the first 77 days, then the social security system covers sick pay.

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Maternity / Paternity

Working mothers in Luxembourg are entitled to 20 days of paid maternity leave, and employers may offer to increase the amount of leave available either at full or reduced pay. Fathers are entitled to 10 days of full pay before they return to work, but agreements are often made from organisation to organisation.

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Childcare

Parents have an entitlement of a total of six months to care for children under five years old.

Contractual Provisions in Luxembourg

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Employment contracts

Employment contracts in Luxembourg can be short-term or long-term, permanent or temporary. Every contract must be in writing, and each party must receive a copy of the agreement.

It is not possible to extend a fixed-term contract beyond two years or to renew it more than twice. Employees must be offered a permanent position or dismissed after this period.

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Probationary Period

The usual probationary period in Luxembourg is between two and six months. In most cases, it is included in the contract of employment and the employee must have the same contract as their peers after passing probation. However, it can only be extended for a maximum of three additional months, which must be agreed to by both employees and employers.

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Working Hours

The maximum number of hours that can be worked in a day is eight, making the normal working week 40 hours.

If necessary, this can be increased to 10 hours a day and 48 hours a week, as long as this is agreed .

The workday can go up to 12 hours a day in specific industries. It would then be limited to a weekly work week of 60 hours.

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Overtime

Employees can only be asked to work overtime in special circumstances, such as if revenue will be lost or there is no one else available to do the work. The employee can still decline overtime if they wish.

An employee is only allowed to work an additional two hours per day and a maximum of ten hours per week. If an employee works more than the required number of hours per week, they are entitled to a 40% uplift to their hourly wage.

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Rest breaks

During a work week, employees are entitled to a minimum of 44 hours of uninterrupted rest time off, usually over the weekend. An additional one day of leave is granted to employees who have worked overtime of more than eight hours in a working week.

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Vacation allowance

Workers in Luxembourg are entitled to 25 days of annual leave (exclusing bank holidays). Employees with a registered disability are offered an additional six days of annual leave on top of this allowance.

Termination

An employer must inform an employee in writing of the reasons for the termination of their employment. The reasons given can include poor performance, incompatibility, business needs or poor conduct. The employee must be given notice of dismissal.

Resignation by the employee

Employees must give written notice if they wish to leave their employer and serve the adequate notice outlined in their employment contract. Employers and employees can agree to reduce the notice period, and the employee may be asked to help hire a replacement in the final weeks of their notice period.

Indirect termination

Employees who are dismissed for reasons unrelated to their personal performance must be given written notice and a notice period in line with their employment contract. Employers with more than 150 employees must hold a per-dismissal interview with the employee before dismissing them.

Termination by mutual consent

Employers and employees must agree in writing any immediate mutual termination, otherwise the notice period outlined in the employment contract must be observed by both parties.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Luxembourg

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

  • Understand the different types of EOR taxes
  • Stay up-to-date on the latest changes to EOR tax regulations
  • Avoid penalties for non-compliance
Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013. 

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Adrian Cooney

Reviewed by:

Adrian Cooney

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Luxembourg employment solutions

What is an Employer of Record in Luxembourg?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Luxembourg. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Luxembourg?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Luxembourg. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Luxembourg?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Luxembourg. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.

Let's get started

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