Pursuant to Article 137, paragraph 5a of the amended law of 4 December 1967 on income tax (the “LITL”), and by way of derogation from the normal taxation system, remuneration paid by temporary employment contractors under an assignment contract to temporary employees whose agreed gross hourly wage does not exceed the amount of EUR 25 is taxed at a flat rate.
The flat-rate tax was previously set at 10% of the difference between, on the one hand, the gross amount of the remuneration taxable in Luxembourg and, on the other hand, the social security contributions referred to in Article 110, number 1 of the LITL on the part of the remuneration taxable in Luxembourg.
By Grand-Ducal Decree dated 11 March 2025 amending the Grand-Ducal Decree dated 17 December 2021 implementing Article 137, paragraph 5a and article 143, paragraph 1 of LITL, the flat-rate tax has been reduced from 10% to 7.5%.
The flat-rate reduction is effective from the 2025 tax year.
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