In July 2025, the Luxembourg government drew up a draft Grand-Ducal Regulation (the “Draft Regulation”) amending the Grand-Ducal Regulation of 9 January 1974 on the determination of tax withholding on salaries and pensions (the “Regulation”).
Context: flat-rate withholding tax for occasional work
Article 27 of the Regulation provides for the possibility for an employer who, for occasional work, is required to hire temporary staff, to proceed with a flat rate withholding tax on the wages paid for such occasional work. Accordingly, when benefiting from the simplified regime, the employer is no longer required to obtain a tax withholding form or to make monthly wage declarations to the social security authorities, thereby reducing the administrative and tax burden associated with the employment of occasional workers.
Eligibility conditions
To benefit from this simplified regime, the employer must obtain an authorisation issued by the competent tax office. The issuance of this authorisation is subject to the fulfilment of three conditions set out in Article 28, paragraph 1 of the Regulation.
- Employer must bear the flat-rate withholding tax
Maximum 18 consecutive days per employee
The non-regular hiring period may not exceed 18 consecutive working days for the same employee, except for occasional work carried out by pupils or students during school holidays or mandatory internships.
- Hourly wage cap (net of tax and social security)
Proposed amendment of the hourly wage cap
Since 1 January 2023, Article 28, paragraph 1 (c) of the Regulation has required that the net hourly wage must not exceed the amount of EUR 16.- for the employer to apply the flat-rate wage tax withholding regime.
However, as of 1 May 2025, the statutory minimum wage for unskilled workers has been increased to EUR 2,703.74 per month, which corresponds to an hourly wage of EUR 15.6285. This means that any future adjustment to the salary index would push the minimum hourly wage beyond the current EUR 16.- threshold. Consequently, employers would no longer be able to guarantee access to the occasional work regime for the affected employees.
The Draft Regulation aims to preserve access to the simplified regime by raising the wage cap from EUR 16.- to EUR 18.- per hour.
The new threshold is set to take effect on 1 January 2026.
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