YOUNG EMPLOYEE INCENTIVES
Luxembourg has introduced targeted tax incentives to strengthen support for young professionals, helping employers attract, retain, and assist early-career employees.
Young employee bonus
75%
Tax exemption on an employer-granted bonus
Eligible if the employee:
- Has an annual gross salary ≤ €100,000
- Is under 30 on 1 January the year the bonus is paid
- Signed their first permanent employment contract in Luxembourg after 31 December 2024
- Has been with the same employer for no more than 5 consecutive years when receiving the benefit
Bonus caps
Rental allowance for young employees
- Employers may grant a monthly rent subsidy to employees under 30 (as of 1 January) who are renting accommodation in Luxembourg
- 25% tax exemption on the subsidy
- Maximum: the lower of EUR 1,000/month or actual rent paid (excluding utilities)
- Salary eligibility: annual income ≤ 30× minimum social wage, approx. €94,960 in 2025
Employer guidance
- Both the bonus and the rental allowance are optional benefits granted at the employer’s discretion
- Employers must verify age, salary ceilings, and the first-contract requirement
- Annual Reporting:
- Employers must report beneficiaries of young employee bonuses or rental subsidies via MyGuichet.lu, using the ACD’s standard format
- Reporting deadline: 31 January of the following year
- Employers must maintain documentation supporting eligibility
WHY IT MATTERS
- Improves net income for young employees
- Eases housing costs during the early career stage
- Strengthens talent attraction and retention within Luxembourg’s financial centre