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19 of June 2024

New Rental Allowance for Employees in Luxembourg Effective May 22, 2024

The Luxembourg law enacted on May 22, 2024, aimed at boosting the housing market in Luxembourg, introduced a new rental allowance for employees. To qualify for an exemption of this allowance up to 25%, several conditions must be met:

  • The exemption is reserved for employees under the age of 30 at the beginning of the tax year in Luxembourg.
  • The amount paid by the Luxembourg employer must not exceed the rent paid by the employee.
  • The 25% exemption is capped at 1,000 euros (if the employer pays a rental allowance of 2,000 euros, the 25% exemption applies only to a maximum amount of 1,000 euros).
  • The employee´s annual gross salary in Luxembourg, including all earnings and benefits, excluding the rental allowance, must not exceed thirty times the monthly social minimum wage for qualified workers.

In the case of partial remuneration or part-time work, the maximum monthly amount of the rental allowance eligible for the exemption is calculated proportionally to the paid working hours compared to the working hours for a full-time job over the entire month. The law applies retroactively in Luxembourg from January 1, 2024.

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