Here you will find all the latest news about HR management in Luxembourg!
1/ Electric vehicles: extension of transitional measures until 31 December 2030?
3/ Increase in the Salaire Social Minimum (SSM) [Social Minimum Wage] as of 1 January 2027
4/ Annual leave 2026: the end of the year is approaching!
5/ Bill to reform the redeployment allowance
6/Towards a simplification of secondment procedures?
1/ Electric vehicles: extension of transitional measures until 31 December 2030?
As part of the transition towards more sustainable mobility, the Government has tabled a draft Grand‑Ducal regulation to extend the favourable tax regime applicable to electric company cars.
Reduced rates are currently used to calculate the benefit in kind for fully electric vehicles and hydrogen‑powered vehicles:
- 0.5% for the most energy‑efficient electric vehicles;
- 0.6% for other electric vehicles and hydrogen‑powered vehicles.
Initially due to be increased to 1% and 1.2% respectively as of 1 January 2027, these rates would ultimately be maintained until 31 December 2030.
The draft regulation also provides that, as of 1 January 2027, plug‑in hybrid vehicles emitting no more than 50 g CO₂/km may qualify for a 1% benefit‑in‑kind rate until 31 December 2030.
As of 1 January 2031, the applicable rates would be:
- 1% for the most energy‑efficient electric vehicles and for hydrogen‑powered vehicles;
- 1.2% for other electric vehicles;
- 1.5% for plug‑in hybrid vehicles emitting no more than 50 g CO₂/km.
Through this reform, the Government seeks to preserve the fiscal attractiveness of electrified vehicles, particularly in view of a slowdown in electric‑vehicle registrations observed in recent years.
This matter remains open, as the draft Grand‑Ducal regulation has not yet gone through the complete adoption process.
2/ Crédit d’Impôt conjuncture (CIC) [Economic Tax Credit], Crédit d’Impôt Salaire Social Minimum (CISSM) [Minimum Social Wage Tax Credit] : reminder of the latest changes!
To support the purchasing power of employees, the tripartite agreement of 8 June 2026 introduced several adjustments to the CIC and the CISSM: A brief reminder of the main changes.
Introduction of the CIC
To strengthen purchasing power while mitigating the effects of inflation, the Government has decided to reintroduce, as in 2023, the CIC for the period from 1 June 2026 to 31 December 2026. The purpose of this tax credit is to offset the postponement to 1 January 2027 of the adjustment of the tax scale following the indexation that took place on 1 June 2026.
The CIC will be paid directly to employees through payroll, in the same manner as the Credit d’Impôt Salaire (CIS) [Salary Tax Credit] and the CISSM. Its cost will be borne entirely by the tax administration. The amount varies according to the employee’s gross monthly salary.
As of 1 January 2027, the tax advantage corresponding to the CIC will be directly integrated into the tax scale.
| Gross monthly salary | CIC amount |
|---|---|
| €1,125 – €1,250 | Between €0 and €2 per month |
| €1,250 – €2,100 | Between €2 and €3.50 per month |
| €2,100 – €4,600 | Between €3.50 and €22 per month |
| €4,600 – €9,500 | €22 per month |
| €9,500 to €9,925 | Between €22 and €24 per month |
| €9,925 to €14,175 | €24 per month |
| €14,175 to €14,916 | Between €24 and €27.13 per month |
| Above €14,916 | €27.13 per month |
Increase in the CISSM as of 1 January 2027
Introduced in 2019, the CISSM is intended to improve the net income of employees with the lowest earnings. Under the new tripartite agreement, the social partners and the Government have agreed to strengthen gradually the purchasing power of employees earning low or near‑minimum wages, in particular through the following measures:
- An increase in the CISSM, from €81 to €179 as of 1 January 2027:
| As of 1 January 2027 | CISSM amount |
|---|---|
| Gross monthly salary between €1,800 and €3,000 | €179 per year |
| Gross monthly salary between €3,000 and €3,600 | Decreasing amount from €179 to 0 per year |
- An increase in the CISSM, from €179 to €200 as of 1 July 2027;
| As of 1 July 2027 | CISSM amount |
|---|---|
| Gross monthly salary between €1,800 and €3,000 | €200 per year |
| Gross monthly salary between €3,000 and €3,600 | Decreasing amount from €200 to 0 per year |
3/ Increase in the Salaire Social Minimum (SSM) [Social Minimum Wage] as of 1 January 2027
The Government has tabled a bill providing for a structural increase of 3.8% in SSM as of 1 January 2027.
This adjustment stems from the statutory requirement to review developments in general economic conditions and income levels every two years so as to assess whether an adjustment of the minimum wage is warranted.
At the currently applicable index of 992.24, the monthly social minimum wage for unskilled workers would rise from €2,771.33 to €2,876.60. For skilled workers, the social minimum wage would increase from €3,325.59 to €3,451.92.
The bill was tabled on 5 October 2026 and is presently undergoing the legislative process.
4/ Annual leave 2026: the end of the year is approaching!
As the end of the year approaches, the rules governing the carry‑over of annual leave should be borne in mind. In principle, paid annual leave must be fully granted and taken during the current calendar year. However, in certain cases and subject to specific conditions, it may be carried over beyond 31 December.
By way of exception, annual leave may be carried over beyond 31 December of the current year in the following four situations:
- Proportional leave accrued during an employee’s first year of service may be carried over until 31 December of the following year. The employee must submit a request to the employer, who may not refuse the carry‑over.
- Leave not taken by year‑end due to service needs or justified requests from other employees may be carried over until 31 March of the following year.
- Annual leave not yet taken by a pregnant employee at the start of her maternity leave may be carried over to the following year, in principle until 31 March. The same applies to adoption leave and parental leave.
- Following the judgment of the Court of Justice of the European Union (CJEU in the Schultz-Hoff case (20 January 2009)), an employee who has been unable to take annual leave due to long‑term illness may no longer lose the right to such leave. If the employee is unable to take leave during the year in which it is accrued due to incapacity for work, he or she is entitled to carry it over to the following year.
Employers may nonetheless introduce a more flexible system for carrying over leave (e.g. unlimited carry‑over from one year to the next, a time‑savings account, etc.).
5/ Bill to reform the redeployment allowance
The Government has tabled a bill to amend Articles L. 551‑1 and L. 551‑3 of the Labour Code so as to bring the external professional redeployment scheme into compliance with the judgment of the Constitutional Court of 24 October 2025.
The Court actually held that the situation whereby certain employees subject to external professional redeployment receive a lump‑sum allowance, while others in comparable situations are excluded from it, was contrary to the principle of equality before the law.
To remedy this unequal treatment, the bill provides that, where an employee under an employment contract is subject to a decision of external professional redeployment, the employer is, in principle, required to pay a lump‑sum allowance calculated on the basis of the employee’s length of service. This allowance would therefore apply to a much broader range of situations than at present, including cases where external redeployment is decided because the employer already meets the statutory quotas for disabled or redeployed employees.
The bill also provides that the lump‑sum allowance is in principle to be reimbursed by the Employment Fund upon request by the employer.
Certain exceptions are nevertheless foreseen:
- No reimbursement would be granted where external redeployment results from the employer’s refusal to carry out internal redeployment;
- Where the employer is exempted from internal redeployment due to the serious prejudice such redeployment would cause, reimbursement would only be granted to undertakings with no more than 49 employees.
The legislative process is still ongoing.
6/ Towards a simplification of secondment procedures?
Tabled on 28 August 2026, Bill no. 8805 seeks to adapt Luxembourg legislation on the secondment of employees so as to take account of observations made by the European Commission. The text pursues a dual objective, namely to simplify certain administrative obligations considered excessive and to make controls relating to secondment more effective.
Creation of an exemption for certain short‑term assignments
The bill introduces a new exemption from secondment formalities for certain ad hoc interventions carried out in Luxembourg. This would apply in particular to technical activities involving the servicing, maintenance or repair of machines, installations or equipment, as well as certain temporary professional activities such as training courses, conferences, business meetings, or participation in trade fairs and exhibitions.
This exemption would nonetheless be limited to assignments not exceeding 40 hours per month, and would not apply to the construction sector, which remains subject to the standard secondment rules.
Reduction of certain administrative formalities
One of the main changes consists of abolishing several obligations currently imposed on the contracting authority or the recipient of the services. In particular, they would no longer be required to verify that the posting undertaking has correctly submitted its secondment declaration or designated a contact person in Luxembourg.
This measure aims to refocus responsibilities on the posting employer and to bring Luxembourg legislation into line with European law.
Relaxation of documentary requirements
The text also provides for a simplification of the documents that the posting employer must be able to produce during an inspection. In particular, it abolishes the requirement that certain documents equivalent to the employment contract be issued or certified by a supervisory authority in the country of establishment.
Strengthening of administrative sanctions
To combat fraudulent situations more effectively, the bill proposes raising the ceiling for administrative fines imposed by the Inspection du Travail et des Mines (ITM) [Labour and Mines Inspectorate]. The maximum amount would increase from €50,000 to €75,000.
7/ Abattement de Maintien dans la Vie Professionnelle (AMVP) [Employment Retention Allowance]: new category of potential beneficiaries
Introduced at the end of 2025 to encourage workers to remain active beyond the date on which they meet the conditions for entitlement to an old‑age pension, the AMVP may soon be available to a wider group. A draft bill indeed provides for its extension to recipients of progressive pensions/retirement schemes.
At present, this tax advantage, which may reach €9,000 per year, is not expressly available to employees receiving a progressive pension in the private sector or progressive retirement in the public sector.
Bill no. 8773 now clarifies that entitlement to the AMVP will, provided the other statutory conditions are met, be granted to:
- private‑sector employees receiving a progressive pension;
- public‑sector officials receiving progressive retirement.
Applicable retroactively from the 2026 tax year, this measure aims to enhance the attractiveness of the new progressive pension/retirement schemes and to encourage the continuation of professional activity, even on a reduced‑time basis, while ensuring equal treatment between the private and public sectors.
The bill was submitted to the Chamber of Deputies on 19 June 2026 and is currently progressing through the legislative procedure.
Would you like to receive the latest news concerning HR in Luxembourg directly in your inbox? Sign up for My HR Update: https://www.securex.lu/en/#legal-updates