Companies enlarging their international operations into Luxembourg open a wealth of opportunities for expansion throughout the European Union and further afield.
Challenges come alongside the potential benefits, however. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring new staff in-country. Employment laws, payroll and income tax regulations are areas where you cannot afford mistakes.
Foreign companies wanting to hire staff in Luxembourg must establish a legal entity, most typically choosing a Société á Responsabilité Limitée (S.a.r.l.), which has most of the characteristics of a private limited liability company. Also, the company law reform in 2016 introduced a simplified form of a company limited by shares, a Société par actions simplifiée (SAS) as another option.
Taking this step before running payroll in Luxembourg requires an in-depth knowledge of employment and taxation laws – and keeping up to date with changes.
However, there is another and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then put into action our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns, and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities.
Outsourcing your payroll in Luxembourg will streamline your operations by dealing with the following:
- Sending a ‘start of employment declaration’ to the Joint Social Security Center (Centre commun de la sécurité social, CCSS) for each new employee.
- Obtaining their tax card from the relevant RTS tax office on the Luxembourg Inland Revenue website, to make deductions from their salary.
- Applying for a business permit from the General Directorate for Small and Medium-sized Enterprises of the Ministry of the Economy.
- Registering your company with the CCSSto obtain an employer’s registration number (matricule employeur) to determine the tax class according to business activities.
- Ensuring the company is registered within eight days of the first employee commencing work. Failure brings fines of €50 (US$56) per employee to a maximum of €2,500 (US$2,820).
- Registration can be completed online via SECUline (DECAFF’ procedure).
- Obtaining each employee’s 13-digit national identification number (matricule) from the CCSS.
- Ensuring contracts are in place with employees.
- The employees’ tax cards must be renewed each year.
- Dealing with which of the 28 tax offices is relevant for the company employees.
- Where applicable, obtaining a tax card for non-residents from the RTS tax office for non-residents.
- For non-resident employees, dealing with the relevant tax office according to the country in which they have tax residence – such as Tax Office Y for France, Z for Germany and X for Belgium and other nations.
Additional payroll support includes:
- Calculating employees’ monthly salary and sending their pay slips.
- Submitting employees’ and employers’ wage tax returns.
- Creating and submitting your company’s annual accounts and year-end statements.
- Creating payment schedules for salaries and any insurance contributions.
- Ensuring accurate personal income tax returns are filed for you and your employees.
