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Employment in Luxembourg
- Luxembourg has one of the lowest unemployment rates in Europe.
- The country has the second-highest GDP per capita in the world, at an astounding 102,900 USD.
- Expatriates can enjoy tax exemptions for the first five years they live in the country.
Working in Luxembourg has long been an attractive option for expats who want to benefit from the low unemployment rate, the low inflation, and the country’s solid growth. The Global Financial Crisis caused a dip in the country’s overall economic performance. However, public debt remains lower than in almost all other European states and Luxembourg is recovering strongly from the crisis. Unemployment, however, is becoming a minor issue, though less so for those with a university education, trade qualification, specialist skills, and/or plenty of work experience.
The Luxembourg Economy: As Robust as Steel
As much as Luxembourg might be the green heart of Western Europe, expats mostly benefit from the strong, high-tech-driven service sector of the country and the recently introduced special tax exemptions for expats working in Luxembourg.
At the beginning of the 20thcentury, the Luxembourg steel industry experienced a significant boost, becoming one of the major driving forces of the country’s income. Today, in contrast, the iron and steel sector make up no more than 7% of the entire economy. Luxembourg is, however, still home to ArcelorMittal, the largest steelmaker in the world. The financial services and technology sectors have developed and taken over the dominant role. With about 150 banks and a high number of national and international employees working in Luxembourg’s financial sector, this branch is growing significantly.
The country’s excellent telecommunications infrastructure, economic stability, and access to other European financial centers make working in Luxembourg an interesting option — especially for high income, professional, international jobs in English, French, and German. Moreover, the country is taking measures to diversify the service sector, offering yet more employment opportunities.
The Second-Richest Country in the World
The European microstate is incredibly wealthy: with a Gross Domestic Product of 56.58 billion USD, and a small population, its GDP per capita is second worldwide only to Qatar. While its diversified economy has long had strong manufacturing and financial sectors, it’s increasingly promoting itself as a technology hub and home to data centers. Skype and Amazon, for example, have their (European) headquarters in Luxembourg. This, however, and its wealth, may also have something to do with Luxembourg’s rather lax and enigmatic tax laws, which make it a tax-haven for Europe’s wealthiest.
Luxembourg is also very open to foreign investors, particularly in medium, light, and high-tech industries. The government offers various incentives in the fields of taxes, plant equipment, and construction to attract investors. Besides the sectors mentioned above, the country’s small, yet productive agricultural sector, employs 1.3% of those working in Luxembourg. Unemployment was on the rise from 2007 until 2014 — when it reached 7.2% — because of the economic crisis. However, the economy is performing better, and the unemployment rate was down to 6.9% in 2015.
The Job Search in Luxembourg: A Lot of Support Available
If you plan on living and working in Luxembourg and feel like you need assistance with the job search, you should register with the Agence pour le développement de l’emploi (Agency for the Development of Employment — ADEM). Its advisers can support and assist you in finding a new job in Luxembourg. As a foreigner, you may only register as a job seeker if you fulfill the following conditions:
- have a legal domicile in Luxembourg
- have a social security number
- fulfill all conditions for “exercising professional activities” in Luxembourg (this includes having a residence permit)
- are ready to work and willing to accept any appropriate job offer
There are seven ADEM branches: Luxembourg, Diekirch, Differdange, Dudelange, Esch-sur-Alzette, Wasserbillig, and Wiltz. You can register at the one located closest to your home.
However, if you do not fulfill the conditions above or want more freedom in your job search, you should look into recruitment agencies instead. The Union Luxembourgeoise des Entreprises de Travail Intérimaire has a list of different employment agencies you may register with. Word-of-mouth is also always a great way to conduct your job search in a small country such as Luxembourg. Make sure to activate your expat network and see if there is a new job opening which hasn’t yet been advertised. Even if your expat friends cannot help you with the job search itself, they should at least be able to provide you with lots of useful information on work conditions, legal requirements, and employment in Luxembourg.
Another option to realize your plan of working in Luxembourg is by doing an internet job search. There are many popular job search engines which may help you find an occupation:
Of course, while the new job search methods are good, the old-fashioned newspaper job search should not be disregarded by expats who plan on working in Luxembourg. Have a look at the local press and check their classifieds sections and their online classifieds. The most important newspapers are:
Moreover, Hobsons Benelux Move-Up Career Guide offers useful information to people who plan on working in Luxembourg. It is available in various languages and definitely a valuable resource for expats living in the BeNeLux (Belgium, Netherlands, and Luxembourg) countries.
Doing Business in Luxembourg
Working Conditions in Luxembourg: Has Perfection Been Reached?
Luxembourg has a minimum statutory wage (salaire social minimum) which applies to all employees and assures fair payment. In fact, it’s the highest minimum wage in the world! The exact rate of this wage is determined by the employee’s age and their qualifications. Thus, an unskilled worker over the age of 18 receives 100% (1,922 EUR in January 2016) of the minimum wage, 16-17 year olds receive 75% to 80%, and skilled workers who are older than 18 receive 120%.
Other than that, working conditions strongly resemble those of other Western European countries. 40-hour weeks are the norm, with overtime being paid or compensated for. Many companies, though not all, are on flexitime, which allows their employees to arrange their working hours more or less as they see fit.
Taxation in Luxembourg: Lower Than in Its European Counterparts
In Luxembourg, each employee has to complete a tax card at the beginning of the fiscal year — residents receive this automatically in the post. Taxes are then withheld and deducted from your salary. Please remember that, as a resident in Luxembourg, you are taxed on the worldwide income which you receive throughout the tax year. It is, however, advisable to take a look at the double taxation agreements that exist between Luxembourg and other countries, maybe yours is on the list. You are considered a resident if you are fiscally domiciled in Luxembourg or if you reside in the country for more than six months within one year.
The total taxable income is determined by, all in all, eight categories of taxable income:
- employment income
- business or commercial profits
- profits gained from self-employment
- net income from pensions or annuities
- net income from investments
- net income from rented properties
- profits derived from forestry or agriculture
- other sources of net income
With the exception of income from employment, pension, some savings, and some investments, taxes for which are withheld at the source, all income must be declared in your annual tax return. With the Administration des Contributions Directesyou can calculate your taxes online (in French).
Expat Tax Exemptions in Luxembourg
In an effort to attract skilled, foreign workers, the Luxembourg Tax Authorities introduced new measures in January 2014 that grant expats special tax exemptions. These include non-recurring expenses, such as those involved in moving to Luxembourg, and recurring expenses, such as those for housing, school fees, yearly home travel, and more.
The exemptions are very generous, up to 80,000 EUR for the move and up to 3,000 EUR per month for recurring expenses. Furthermore, expats can continue to take advantage of these exemptions for up to five years after their initial arrival. Just make sure you inform your employer at the beginning of each year that you are a “candidate” for the expat tax exemptions and they will pass the relevant information on to the authorities.
Social Security in Luxembourg: Based on the European System
Luxembourg has a comprehensive social security system, offering a wide choice of benefits to residents who have contributed to the nation’s social security system. These benefits do not only include public healthcare, which we have covered in our article on living in Luxembourg, but also unemployment benefits, old age, and widowers’ pensions, as well as sickness, maternity, and parental leave.
In order to make use of most of these benefits, you must have contributed to Luxembourg’s social security system for a while. For instance, in order to receive unemployment benefits, you need to have worked at least 26 weeks within the last twelve months. Your social security contributions are deducted automatically from your monthly income. For more information on social security, please contact the Ministry of Social Security or the Joint Social Security Center (both websites are in French).
Luxembourg’s Business Etiquette
Luxembourgers, like most Europeans, are quite direct in their communication style. However, tact and diplomacy are highly valued and interpreted as a sign of respect. It is important to navigate this fine line between politeness and directness when doing business in Luxembourg. Try to be open but not blunt and to say what you think without being rude. Luxembourgers like to establish a personal relationship with their business partners, making sure that the people with whom they do business are indeed trustworthy. It is important to give your business partners enough time and space to do so if you want to close a deal.
At the same time, business is supposed to be logical and based on reason. Throughout meetings, Luxembourg business people like to stick to the protocol: presentations should be accurate and concise. Try to avoid making exaggerated claims or bragging about your achievements. It is important to stick to the hard facts and prove that you are a reliable business partner.
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