RTL Today - Salary, energy, remote work...: These things will change in Luxembourg in 2023

Income, taxes, remote work... What's new from 1 January? Our colleagues from 5Minutes gave an overview of what will change in Luxembourg in 2023.

Elections: Double trouble

Luxembourgers will be called to the poll twice in 2023: First on 11 June for the municipal elections, followed by the legislative elections in October.

This will lead to the election of 60 deputies, the formation of a new government and the appointment of a Prime Minister.

Two or three wage indexations?

At least two wage indexations will be triggered from the start of 2023. According to the latest Statec forecasts, the first wage increase will take place in the first quarter - most likely January, or February.

This increase in wages will automatically cause an increase in the cost of certain services, such as health care.

A second index will follow on 1 April 2023. This index should have been triggered on 1 July 2022, but was postponed following a tripartite agreement last spring.

Depending on the evolution of oil prices and the value of the euro against the dollar, a third index may be triggered in late 2023. The government said it was determined to offset the impact on wages paid by companies.

Cost of living allowance

Households struggling with high energy prices are eligible to request an energy bonusfrom the government, which will be continued in 2023.

Minimum salary increase

The September 2022 the tripartite agreement reiterated the interest to increase the minimum social wage.

The law outlines an increase of 3.2%from 1 January, 2023, resulting in the following wages:

€2,387.40 for the non-qualified minimum social wage (+€74.02 per month)
€2,864.88 for the qualified minimum social wage (+€88.83)
€1,909.92 for young workers aged 17 to 18
€1,790.55 for young workers, aged 15 to 17

The change will affect some 67,530 employees, 52.5% of whom are Luxembourg residents. The majority of these employees work in the hotel industry or in retail. It is thought this increase will cost the State around €74.6 million.

Pension increase

Parallel to the increase in the social minimum wage, pensions will riseby2.2% from 1 January 2023.

Quick guide: How to get a pension in Luxembourg

End to rent freeze

The rent freeze put in place in the first tripartite agreement comes to an end on 31 December 2022.

If you understand French and are interested in a podcast on housing in Luxembourg, check out this podcast by our 5Minutes colleague Gaël Arellano.

End to energy tax credit

The energy tax credit, a flagship measure of the previous tripartite agreement, which comes to an end on 31 March, one day before the index is triggered on 1 April.

Electricity price stabilisation

Following the September tripartite agreement, the price of electricity was frozen at its current level and the gas price was capped at +15% of its September price.

In the same vein, the government has decided to grant aid for electric cars charging at public terminals. The aid, capped at €0.50 per kWh, is given directly to suppliers.

Fuel remains cheap...

With the end of the French government aid on fuels on 31 December 2022, Luxembourg is becoming much more advantageous than its neighbours. The price difference will most likely exceed 20 cents per litre.

...but the CO2 tax goes up

Starting at €20 per tonne in 2021, the CO2 tax was increased to €25 per tonne in 2022. In 2023, that figure will increase once again to €30 per tonne.

Given the evolution of VAT, the price increase should reach around 1.2 cents per litre of fuel, and 1.4 cents for fuel oil.

Heating oil remains subsidised...

The November 2022 subsidy for heating fuel will continue throughout 2023. The subsidy is set at 15 cents per litre, resulting in a €300 discount for a tank of 2,000 litres.

...as is gas

Since 1 October 2022, the price of gas in Luxembourg is capped at 15% compared to its average level of September 2022. The aid will be applied until December 31, 2023.

VAT reduction on all products

The measure was voted unanimously by Luxembourg's deputies: as of 1 January 2023 all VAT rates will be lowered by one point. The standard VAT rate will be reduced to 16% (from 17%), the intermediate VAT rate to 13% and the reduced VAT rate to 7%.

New photovoltaic installations will benefit from a super-reduced VAT rate of 3% as of 1 January.

Remote work for cross-border workers

A lot will change for people working remotely in 2023, in particular cross-border workers. The social threshold for remote working, which had already been put on hold until the end of 2022, will be suspended until 30 June 2023.

This threshold normally limits remote work from abroad to 25% of total annual working time. Crossing this threshold triggers a change in social security affiliation. All remote working days performed by a cross-border worker until 30 June 2023 will be exempt from the European 25% regulation.

Tax thresholds on the other hand, are already in effect.

In Belgium, the tax threshold is officially set at 34 days per year (the effect has already been made retroactive for the year 2022). The same applies to France, where cross-border workers can now work from home for 34 days while continuing to be taxed in Luxembourg.

Thanks to a new French law, workers can even go up to one day of remote work per week. Luxembourg employers will have to declare the number of remote work days done by their employees living in France. The latter will then be responsible for making their tax declaration and paying their dues in France.

In Germany, the threshold is still set at 19 days per year.

French cross-border workers taxed twice?

In 2021, French cross-border workers who had an income in both Luxembourg and France, had a surprise increase in their taxes. This was due to a change of calculation in France.

In turn, the French Ministry of the Economy suspended the modification, however only for revenues from 2020 and 2021.

At this point, no permanent solution has been announced. If nothing is done on the French side, it is possible that the 2022 income of French cross-border workers will be taxed more. The border residents could therefore see their 2023 tax notice increase.

No more financial aid for electric or hybrid vehicles

After a one-year extension, the financial aid granted by the Luxembourg government for the purchase of a plug-in hybrid car will end. The last vehicles that can benefit from the aid will have to be brought into service in Luxembourg on 31 December 2021 at the latest. You can find all of the conditions listed at guichet.lu.