On Friday 27 February 2026, Luxembourg's Government Council (Cabinet) approved the draft law establishing a cost-of-living supplement (Complément de vie chère - CVC).
According to Luxembourg's Ministry of Family Affairs, Solidarity, Living Together and Reception of Refugees, this new financial aid reflects the government's commitment to strengthening social cohesion, actively combating poverty and guaranteeing a decent standard of living for all its residents. The new aid aims to provide targeted support to low-income households, with a particular focus on the elderly and school-aged children, to boost their purchasing power and promote their social inclusion.
"The introduction of this draft law marks an important first step in the implementation of the first national action plan for preventing and fighting poverty. This demonstrates the government's ambition not only to define ambitious measures within the framework of the national action plan, but also to implement them within the allotted timeframe," emphasised Max Hahn, Luxembourg's Minister for Family Affairs, Solidarity, Living Together and Reception of Refugees.
The ministry said the new aid is unique in that it consolidates and replaces several existing benefits: the cost-of-living allowance, the energy bonus, financial assistance for the elderly,and the subsidy for low-income households (SMFR). In addition to integrating the SMFR into the CVC, low-income households with school-aged children will receive greater support through an increase in the allocated amounts, up to €3,000 per child per year.
The bill thus harmonises eligibility criteria, applicable rates and income limits, which previously differed from one benefit to another, but also introduces a sliding scale for the CVC amount based on the household's income.
Moreover, with a view to combating non-take-up of social benefits, administrative procedures are also simplified by the implementation of a single application process. Instead of submitting an annual application, households continue to receive the CVC, provided they remain eligible. For recipients of the REVIS social inclusion income, the CVC is paid automatically.
The ministry added that the CVC will serve as a benchmark for granting other social benefits. A specific provision allows applicants for the cost of living allowance to simultaneously apply for a rent subsidy, thus simplifying access to this assistance. Similarly, information on beneficiaries will be transmitted to municipalities, with the goal of promoting better coordination of aid at the local level.
