Luxembourg

Social security contributions in detail

Employers must pay part of the social security contributions and deduct the other part from employees’ remuneration in order to pay the contributions to the Luxembourg Joint Centre for Social Security (‘Centre Commun de la Sécurité Sociale’, or ‘CCSS’). For 2019, the portion to be paid by the employer is divided into contributions to:

  • Health insurance of 3.05% of gross salary, for benefits in kind and cash.
  • Pensions of 8% of gross salary.
  • Accident insurance. As from 2019, the previously applicable rate of 0.90% is replaced by an individualised rate calculated on a bonus-malus system: the base rate is fixed at 0.80 and multiplied for each contributor by a bonus-malus factor determined by Grand-ducal Regulation. The bonus-malus factor is determined and communicated to the employer by the Insurance Accident Association. The applicable rates expressed as percentages of gross salary are currently as follows: 0.72% (bonus-malus factor 0.9), 0.80% (bonus-malus factor 1.0), 0.88% (bonus-malus factor 1.1), 1.04% (bonus-malus  factor 1.3) or 1.20% (bonus-malus factor 1.5).
  • Occupational health of 0.11% of gross salary.
  • The employer’s mutual fund of 0.41% (risk class 1), 1.07% (risk class 2), 1.63% (risk class 3) or 2.79% (risk class 4).

For 2019, the employee must pay contributions to:

  • health insurance of 3.05% of gross salary, for benefits in kind and cash;
  • pensions of 8% of gross salary;
  • dependency insurance of 1.40% of gross salary.

The monthly remuneration on which contributions are calculated is a maximum of five times the statutory minimum wage of a non-skilled employee (i.e. EUR 10,355.50 per month, as at 1 January 2019).

The minimum monthly earnings on which social contributions are payable is, for an unskilled worker, EUR 2,071.10. The social contributions must be paid by the employers every month to the CCSS.

Note that the rate of the employer’s contributions depends on the risk classification for the employer’s mutual fund of the company and on the bonus-malus factor applicable. For the employer’s mutual fund, the rates are: 0.41% for risk class 1; 1.07% for risk class 2; 1.63% for risk class 3; and 2.79% for risk class 4. We have chosen risk class 3 (i.e. 1.63%) for the graph, as we think this is the most representative.

For the accident insurance, the rates are: 0.72% (bonus-malus factor 0.9), 0.80% (bonus-malus factor 1.0), 0.88% (bonus-malus factor 1.1), 1.04% (bonus-malus factor 1.3) or 1.20% (bonus-malus factor 1.5). We have chosen the base rate fixed to 0,80 % for the graph, in the absence of visibility on the most representative rate in January 2019.

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Author: CASTEGNARO

Date: March 2019


Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.

 

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