Luxembourg Chamber of Employees Explains New Tax Measure for Young Employees

The Chamber of Employees (Chambre des Salariés - CSL) has issued a statement (“Socionews”) explaining the new “young employee bonus”.

At the beginning of 2025, Luxembourg introduced this measure aimed at supporting workers under the age of 30.

To be eligible and benefit from a tax exemption of 75% of the young employee bonus paid to them annually by their employer, employees must hold their first permanent employment contract (CDI) with an employer established or having a permanent establishment in Luxembourg and remain with the same employer for as long as they wish to receive the bonus, with a maximum duration of five years, according to the CSL statement.

The maximum annual amount of the young employee bonus giving rise to exemption depends on gross annual pay, with a ceiling set at €100,000. As gross annual earnings increase, the amount of the bonus giving rise to the exemption decreases.

Paid by the employer, this bonus is intended to support employees who are embarking on their careers who, in order to be eligible, must meet the following conditions: be under 30 years old at the beginning of the tax year; have their first open-ended employment contract signed with an employer established in the Grand Duchy of Luxembourg or abroad but with a permanent establishment in the Grand Duchy of Luxembourg; remain with the same employer for as long as they wish to benefit from the bonus, with a maximum of five years.

The maximum annual amount of the young employee bonus, determined for full-time employment, giving rise to the exemption will therefore amount to:

- €5,000 for a gross annual salary of less than €50,000;
- €3,750 for a gross annual salary greater than €50,000 and less than €75,000;
- €2,500 for a gross annual salary greater than €75,000 and less than €100,000.

The CSL recalled that the young employee bonus is 75% tax-exempt, which means that the employee will only be taxed on 25% of the amount received.

IK