Luxembourg Payroll Services

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Luxembourg Payroll

Successful international expansion depends on making the right moves from day one. This is essential for foreign companies establishing a presence and operating payroll in Luxembourg. The complexities of Luxembourg taxation laws can be daunting – there are three classes for personal taxation and complex levels for corporate tax.

Do not worry – our payroll specialists at Bradford Jacobs remove the worry of complying with taxation, payroll, and employment laws to safeguard your expansion objectives with our Professional Employer Organization (PEO) and Employer of Record (EOR) platforms.

We provide complete answers to every question your company will encounter before you move into Luxembourg’s economy. We navigate the administration of the Luxembourg payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities.

You may encounter some challenges regarding payroll but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for Luxembourg.

What Luxembourg Payroll Options are available for Companies?

Remote payroll: This option allows businesses to operate under a single payroll system, by adding employees in Luxembourg to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.

Internal payroll: You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Luxembourg. However, this does require hiring dedicated HR staff who understand Luxembourg’s employment and compliance laws.

Luxembourg payroll processing company: If you are considering outsourcing, then working with a Luxembourg payroll company will help in processing your payroll – but not when it comes to compliance.

Luxembourg payroll outsourcing: However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Luxembourg. We lift the administrative stress from your shoulders so you can focus on what you do best.

Luxembourg Payroll Services

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

What is required to set up Luxembourg Payroll?

Companies intending to run payroll by establishing a legal entity or subsidiary in Luxembourg, typically select a private limited liability company, Société á Responsabilité Limitée (S.a.r.l.), to operate under the Luxembourg Commercial Companies Act. This was significantly revamped and modernised in 2016. The company law reform introduced a simplified form of a company limited by shares, a Société par actions simplifiée (SAS).

Companies registering a company in Luxembourg must follow various essential procedures, including:

  • Decide on the company type, typically an S.a.r.l. or SAS as referred to above
  • Select a company name, which must be unique and reserved with the Companies Register
  • The company name must have the suffix S.a.r.l. or SAS
  •  Provide minimum share capital of approximately €12,000 (US$13,537), which must be fully paid up on incorporation after opening a business bank account for the deposit
  • From one to 100 shareholders
  • Incorporation documents, generally including a notarized Incorporation Deed, Articles of Association, and the share register
  • Certificate of Good Standing from the Registry of Commerce and Companies

Once incorporated, other steps must be followed in order to employ staff and operate payroll. The main requirements include:

  • Sending a ‘start of employment declaration’ to the Joint Social Security Center (Centre commun de la sécurité social, CCSS) for each new employee and obtaining their tax card for deductions from the relevant RTS tax office, which can be found on the Luxembourg Inland Revenue website
  • 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 CCSS to obtain an employer’s registration number (matricule employeur) to verify your 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
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