The profit-sharing bonus (prime participative) is getting a welcome boost. On 11 December 2024, the Luxembourg Parliament passed a set of tax measures that make the regime more generous from tax year 2025.
In short:
- The overall bonus pool may now reach 7.5% of the employer’s positive result for the previous financial year (previously 5%).
- The bonus granted to an employee may now reach 30% of their gross annual remuneration (previously 25%).
- The 50% income tax exemption on the bonus remains unchanged.
The other conditions of the regime still apply, including the list of beneficiaries that the employer must provide to the RTS tax office when the bonus is made available.
The same package also creates a young employee bonus (prime jeune salarié). Employees under 30 at the start of the tax year, who sign their first permanent contract from 2025 with an employer established in Luxembourg and earn up to EUR 100,000 a year, can receive a bonus that is 75% tax exempt. The exempt bonus is capped at EUR 5,000, EUR 3,750 or EUR 2,500 depending on salary, and can be granted for up to five years with the same employer.
Would you like to reward your team more efficiently in 2025? JW Partner stands ready to help you size and document your bonus schemes. Reach out to us at contact@jwpartner.lu.