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