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What salary package can you expect in Luxembourg?



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 ING Luxembourg

Do you have a multilingual and experienced profile in a sector such as IT, banking or finance? Then the chances are high that human resources will offer you a great variety of perks to attract you in their company! If they are generally granted to you free of charge, some are considered benefits in kind and therefore subject to tax and social security contributions. But which ones and are there any exemptions?

Depending on the type of industry, perks can take different forms. Here are the most common in the Grand Duchy.

Provision of a dwelling

Two scenarios are to be considered. In the first case, the rental agreement is concluded in your employer’s name or your employer owns the dwelling. The value of this benefit in kind is assessed considering the accommodation’s characteristics or by analogy to the rent paid on the market for a similar housing. If the dwelling is furnished, the taxable amount is increased by 10%. Incidental costs borne by your employer (heating, electricity, water, insurance, etc.) are to be added to the taxable benefit for their actual amount. Your contribution to the renting costs reduces the value of the taxable amount. This participation is deductible without a limit.

If the rental agreement is concluded in your name and if your employer covers all or part of the rents, the reimbursement is treated as a cash benefit and subject to tax for its nominal value. There is no valuation question.

Supply of a vehicle

The supply of a company car is a benefit in kind. You are presumed to use it for your private needs unless you can demonstrate that you take your personal car to commute between your home and your workplace and that the company car is parked in the company premises outside the regular working hours. Even the journey between home and place of work is a private trip for the tax administration!

The tax authorities provide two methods to assess this benefit in kind. In the valuation according to the cost per kilometre, the assessment is based on the actual private mileage. You must keep a detailed mileage log in which you record the kilometres travelled for private purposes, including the journey between home and workplace. It is up to your employer to establish the standard cost per kilometre according to the vehicle type. The taxable benefit corresponds to the total private mileage at the standard cost per kilometre. In the lump-sum valuation, the monthly benefit is determined by your vehicle’s motorization and CO2 emissions. 

Luncheon vouchers

If there is no canteen, your company can provide you with luncheon vouchers. They allow you to pay for your meal in restaurants or places accepting this type of payment. You will pay 2.80 euros per unit to enjoy these vouchers, regardless of its face value (up to 10.80 euros). The difference between the amount of the voucher and your contribution is tax-exempt.

Preferential loans and interest subsidies

If you are working in the banking sector, your employer traditionally grants you low interest or interest-free (“preferential”) loans. These benefits are then valued on a flat-rate basis set by law. Your employer may also reimburse all or part of the interest borne on a loan contracted by you for private use (“interest subsidies”). The benefit in kind is valued at the nominal amount of interest refunded. Under certain conditions, it is exempt from tax and social security contributions.

Supplementary health insurance

Supplementary health insurance covers the portion of healthcare costs not paid by the national security system. Your employer can finance the contribution for you and even extend it to all your family members. Some insurance companies allow employers to choose the portion they want to fund. In this case, you have the choice as an employee to pay or not the remaining part.   

Supplementary pension plans

In the banking and insurance sector, supplementary pension plans are frequently part of the package. They cover various topics such as retirement, death and disability and are guaranteed until you reach the retirement age. You can also contribute to this pension scheme. The maximum deductible is 1,200 euros per year.

School fees

In some cases, especially if you benefit from an expatriation package, your company bears all or part of your children’s school fees. The perk granted is calculated on the amount of costs paid by your employer.  

Participation plans

They allow you to be directly involved in the company’s performance through the allocation of shares or stock options. The acquired shares are taxed when transferred. The valuation is the market value less the price, if any, paid by you for their acquisition.

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