An employer based abroad may temporarily post his employees to Luxembourg to carry out work within the framework of a transnational provision of services agreement between the employer established abroad and a business or individual client established in Luxembourg.
Posted work does not amend the provisions in the original employment contract and the rights and obligations attached to the contract remain in effect. Posted workers remain under the social security scheme of the country in which they usually work.
Employers also have to:
- ensure that their employees are authorised to stay/work in Luxembourg;
- prove that their employees are covered by social security;
- declare the posted work to the Inspectorate of Labour and Mines (Inspection du Travail et des Mines - ITM) as soon as the work in Luxembourg begins and communicate the necessary elements required for receiving the social identification badge (badge social). Employers also have to designate a natural or legal person in Luxembourg who will be the main contact person for the ITM and the competent authorities in matters of respect of posting conditions;
- respect labour law and income tax which apply to posted workers.
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A posted worker is an employee who has an employment contract with an employer who is not established in the Grand Duchy of Luxembourg, who usually works abroad and who carries out work in the Grand Duchy of Luxembourg for a limited period of time as determined by a services contract.
The provisions for posted work do not apply to self-employed workers nor to commercial maritime companies.
Ministry of the Economy
With regard to posted work, Businesses established in the European Union (EU) or a country treated as such have to notify the occasional and temporary provision of services to the General Directorate for SMEs and Entrepreneurship (Direction générale PME et Entrepreneuriat) at the Ministry of the Economy.
Businesses established outside of the EU must first obtain a business permit, which is issued by the General Directorate for SMEs and Entrepreneurship at the Ministry of the Economy.
Indirect Tax Authority
Inspectorate of Labour and Mines (ITM)
Each business, irrespective of the place of their registered office or the nationality of the posted workers must first, prior to any posted work, submit a posting declaration in order to obtain a social badge for each posted worker. The social identification badge contains the employee's identity details and a barcode which enables the ITM to access the data provided by the company in the posting declaration.
Before the posted work can start, the company is required to designate a natural or legal person in Luxembourg who will be the main contact person for the ITM and the competent authorities in matters of respect of posting conditions.
Declaration of posted work and country of establishment of the posting business
Business established in an EU Member State or a country treated as such
A business established in an EU Member State or a country treated as such may post workers to Luxembourg for the provision of occasional and temporary services.
- Iceland, Liechtenstein and Norway as signatories of the European Economic Area Agreement;
- the Swiss Confederation.
Businesses established in third countries
The provisions of the European Directive on the posting of workers are not aimed at services supplied by businesses established in a third country, but they state that these businesses may not benefit from a more favourable treatment than the businesses established in an EU Member State.
The services can be provided:
- either to a private person or to another business (subcontracting); or
- between the posting business and another business belonging to the same group.
Social security for posted workers
Depending on the place of establishment of the posting business, the administrative formalities for posted workers with regard to the registration for social security may vary.
A difference must be made between:
- businesses established in the EU;
- businesses established in a country treated as an EU Member State;
- businesses established in a country that has signed an agreement with Luxembourg;
- businesses established in a country with no agreement with Luxembourg.
Conditions of residence and stay for posted workers in Luxembourg
The conditions of residence and stay in Luxembourg during the posting depend on the country of establishment of the posting business and the nationality of the posted workers.
Workers who are posted by a business in the EU must have:
- an ID card or passport if they are an EU citizen;
- a passport and a residence permit if they are third-country nationals. Within 3 months of arrival in Luxembourg, third-country nationals must apply for a residence permit for a worker from a service provider established in the EU.
- an ID card or passport if they are a EU citizens;
- a temporary authorisation to stay, a passport and a visa if they are a third-country national. Within 3 months of arrival in Luxembourg, third-country nationals must apply for a residence permit for posted worker.
Luxembourg labour law and posted workers
When a foreign business posts workers to Luxembourg, it must comply with the public provisions in matters of labour law, with the exception of the provisions concerning employment contracts, part-time work, fixed-term employment contracts and the provisions which apply to company collective agreements.
These provisions namely apply to:
- the social minimum wage
- the duration of work, rest breaks, daily and weekly rest hours;
- paid leave and collective leave where applicable;
- public holidays;
- the regulations regarding interim work and labour leasing;
- the provisions on part-time work and fixed term contracts;
- protective measures which apply to young people, pregnant women and women who have recently given birth;
- illicit or illegal work, including the provisions regarding work permits for third-country nationals;
- the health and safety of employees in the workplace in general and more particularly the minimum requirements in terms of health and safety;
- mandatory collective agreements
The minimum conditions in Luxembourg with regard to social minimum wage and leave must be complied with unless the posting is for work during the initial setup or first installation phase within the framework of a supply contract. This work:
- must be essential for the proper functioning of the good supplied;
- must be carried out by qualified or specialised staff;
- cannot exceed 8 calendar days over a period of 12 months;
- must not be in relation with construction work.
However, this installation work remains subject to a posting declaration.
Taxation of posted workers
Determining the place of taxation
The tax residence of posted workers and the duration of their posting will determine if the salaries received are subject to income tax in the country of origin and/or in Luxembourg.
In principle, the person is a tax resident in the country where he has his permanent place of residence.
The place of taxation is determined by international tax treaties signed between the country where the posted worker has his place of residence and Luxembourg.
Taxation in the country of origin
As a rule, the salary will be taxable in the country where the worker has his main place of residence provided the following 3 cumulative criteria are met:
- the total duration of temporary stay in Luxembourg must not exceed 183 days.
The manner in which the 183 days are counted depends on the tax treaty applied, e.g. if the place of residence is:
- France: the duration of each assignment must not exceed 183 days, even if the total duration of the posted work in a year exceeds 183 days;
- Belgium or Germany: maximum 183 days in total per calendar year;
- the remuneration of the posted worker must be paid by an employer established outside of Luxembourg;
- the remuneration must not be paid by a permanent establishment in Luxembourg.
Whenever one of these conditions is not met, the salary paid to the worker for work carried out in Luxembourg becomes taxable in Luxembourg.
Taxation in Luxembourg
Salaries paid for work carried out in Luxembourg become taxable in Luxembourg when:
- one of the cumulative conditions detailed above is not met or;
- there is no tax treaty between the country where the posting business is established and Luxembourg or:
- the posted worker has established his tax residence in Luxembourg, i.e.:
- he has a permanent place of residence in Luxembourg (as well as his vital interests, i.e. social and family ties, cultural and political activities, etc.) or;
- he has his main place of residence in Luxembourg (at least 6 months per year).
In the case where the employee is taxed in Luxembourg, the employer must:
- either deduct the witholding tax himself;
- or allow the employee to complete an income tax return for residents.
Businesses in Luxembourg receiving posted workers
In the event of a posting of a third-country national in the framework of a provision of services, the business or the client where the worker will be posted must:
- verify the posted worker's temporary authorisation to stay/permit before the worker undertakes any work;
- request a copy of the posted worker's temporary authorisation to stay/permit and keep said copy for the whole duration of the assignment.
L-2975 - Luxembourg
Fax: (+352) 40 44 81
08.00 - 16.00
L-1140 - Luxembourg
Postal box B.P. 752 L-2017
Fax: (+352) 22 16 08
Monday to Friday from 08.30 - 12.00