Minimum wage increase

Following a government decision in December 2018, the minimum wage (Salaire Social Minimum – SSM) has increased by €100.00 net with retroactive effect from 1 January 2019.

To implement this minimum wage increase, the legislator has provided for a three-stage process:

1 – First SSM increase of 1.10% (Law of 21 December 2018)

2 – Second SSM increase of 0.90% (Law of 1 March 2019)

 

  SSM – position as at 31/12/2018 SSM + 1.1% as from 01/01/2019 SSM + 0.9% as from 01/01/2019
SSM for an unskilled worker €2,048.54 €2,071.10 €2,089.75
SSM for a skilled worker €2,458.25 €2,485.32 €2,507.70

 

 3 – Introduction of a new minimum wage tax credit (Crédit d’impôt Salaire Social Minimum – CISSM):

The CISSM is reserved for employees receiving an income close to the current SSM and can be granted to persons who:

  • earn a taxable professional income in Luxembourg;
  • are in possession of a withholding tax card;
  • are personally registered with a social security scheme in Luxembourg or abroad.

Accordingly, for a gross monthly salary linked to a full-time position (including monthly remuneration, additional pay for overtime work, additional pay for hours of leave, periodic bonuses, etc.):

  • from €1,500.00 to €2,500.00, the CISSM amounts to €70.00 per month;
  • from €2,500.00 to €3,000.00, the CISSM amounts to [70 / 500] X [3,000 – gross monthly salary] per month.

No CISSM is granted for salaries below €1,500.00 or above €3,000.00.

Example 1: employee working part-time:

  • Gross monthly salary for part-time work: €1,150.00
  • Gross monthly salary for full-time work: 1,150 X 176 / 88 = €2,300.00

Using the formula, the theoretical CISSM amounts to €70.00, and should be granted in the amount of 70 X 88 / 176 = €35.00

Example 2: employee working full-time:

  • Gross monthly salary for full-time work: €2,700.00

Using the formula, the theoretical CISSM amounts to: 0.14 X [3,000 – 2,700] = 0.14 X 300 = €42.00

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