On 1 January 2024, a number of changes will come into force in the Grand Duchy. Salaries, state subsidies, housing, mobility... our colleagues at RTL Infos compiled a list of everything you need to know.
Major tax cut
Good news for workers and pensioners in Luxembourg. On Wednesday 20 December, MPs voted in favour of the promised 2024 tax cut.
Starting from 1 January, the tax scale will be adjusted, providing an effective tax burden reduction of approximately 10%. Initially elaborated by the previous government under Prime Minister Bettel's leadership during the spring tripartite, it has now been enhanced by the new Frieden government.
Four of the eight index points that have come into force since 2017, but were not applied to the tax scale, will be caught up. This adjustment is more favourable than the “conjuncture” tax credit (economic tax credit) that came into effect in July 2023. In January, the latter will be replaced by this new, more advantageous tax scale, and it will disappear from your pay check.
Here's how the tax cuts break down:
For a gross annual income of EUR 50,000 euros, in Class 1, you pay EUR 876 less per year in the future. In Class 1A, it's almost EUR1,200 less per year. In a collective taxation situation in Class 2, it's EUR 286 less.
Now, if we consider a gross annual income of EUR 100,000, in Class 1, it's around EUR 1,100 less per year or a reduction of 4.6%, in 1A it's EUR 1,160 less or 5%, and in collective Class 2, it's almost EUR 1,600 less, which is a reduction of 13.5%.
This progressive reduction continues up to a gross annual income of EUR 125,000. Beyond this level, you reach the maximum reduction in taxes, with almost EUR 1,200 less per year in Class 1, around EUR 1,260 less in 1A, and almost EUR 2,200 less in collective Class 2.
Read more: Tax cuts 2024 - This is how much more you'll earn
A new index expected in 2024
According to Statec's inflation estimates, a new index is predicted for 2024. The latest calculations indicate that salaries and pensions will see an increase of 2.5% during the summer towards the third quarter of the year.
Regarding salaries for public sector employees, there will be a linear increase of 1.95%, and after a year, the increase of 5% on the first 100 salary points will be removed.
CO2 tax increasing again
As announced by the Luxembourgish government in its climate plan, the country’s CO2 tax is set to increase again from the 1st of January onward. It will rise from €30 to €35 per tonne of CO2. A slight increase of a couple of cents per litre of fuel: 1,2 cents per litre of diesel, and 1 cent per litre of petrol. Heating fuel is also affected.
Read more: Luxembourg's CO2 tax set to increase in 2024
© Hans Lucas via AFP / Hans Lucas / Nicolas Guyonnet
A small rebate with the CO2 tax credit
From the 2023 tripartite negotiations emerged a new benefit for workers and pensioners: the CO2 tax credit. This aid will "offset the cost of the CO2 tax for the lowest salaries", explained government officials. The new credit will come into force on the 1st of January.
According to calculations based on the respective legal text, a worker earning the minimum social wage (€3,085.11 gross) will receive €14 per month thanks to the CO2 tax credit.
Important to highlight is the fact that this tax is regressive, meaning that that a worker with a gross income of €5,000 will receive only €7 per month. Workers earning a minimum of €6,250 gross per month will receive €2, and those with incomes exceeding €79,999 will not qualify for this credit.
Other changes
From July 1 2024, "tethered caps" will be mandatory for bottles made out of plastic or partially made out of plastic. Most have seen these tethered capped bottles from big brands such asCoca-Cola or Fanta: The cap is bound to the bottle. The purpose of this regulation is to have less plastic end up in landfill or nature.
On July 7 2024, a new regulation will impact any new cars that will be released. According to the new EU directive, a black box in cars will become mandatory. This box records data to better reconstruct accidents should they occur. Many cars are already equipped with this technology.
Then, on December 28, 2024, another EU directive will come into force. New mobile phones, tablets, digital cameras, headphones, or various electronic devices must, from that day onwards, be capable of being charged with a standardised USB-C port.
Housing: the government promises to act fast
The 2023 coalition agreement outlines measures aimed at a "short-term stimulation of the construction market for new units" in Luxembourg. Measures include:
• An accelerated depreciation rate for rental housing
• A reduction in capital gains tax
• An increase to the "Bëllegen Akt” tax credit for the purchase of a main residence
• The "Bëllegen Akt" may also apply to individuals looking to invest in rental property
• Owners taking out mortgages will also be permitted to deduct more annual interest when filing tax returns.
Electricity prices remain regulated in Luxembourg
As announced during the Spring 2023 tripartite, electricity prices will continue to be regulated in 2024 in Luxembourg. The government's plan is to maintain electricity prices at the level of 2022 until the end of the coming year. The government is also set to extend its assistance program for businesses significantly affected by the surge in energy prices resulting from Russia's aggression against Ukraine. The extension is planned until June 2024.
Meal vouchers now €15
Beginning 1 January, the value of meal vouchers in Luxembourg will reach €15, compared to €10.80 in 2023. This increase is implemented without any change in the share paid by employees - they will continue to contribute €2.80.
The new feature in 2024 is that meal vouchers can now be used to buy foodstuffs in addition to "meals" at lunch time. People will be able to use them after work, on weekends and even during paid leave.
Finally, meal vouchers will be digitised. They will either take a form similar to credit cards or will be directly displayed on your phone screen to improve convenience for workers, employers, restaurateurs and retailers.
Working from home: equality for all cross-border commuters and workers
From New Year's Day, German cross-border workers will, at last, be on par with their French and Belgian counterparts.
Recent agreements between Germany and Luxembourg now allow German workers to work from home for 34 days a year, compared to the previous 19 days. Furthermore, this change will happen without any additional contribution from workers.
Considering the European framework agreement that came into effect on the 1st of July 2023, cross-border workers will now have two thresholds to adhere to:
- A restriction of 34 days for income taxation
- A target of 49% of their annual working time to maintain affiliation with Luxembourg's social security system
© Joshua Mayo / Unsplash
Hidden double taxation: reprieve for French cross-border workers
The hidden double taxation issue for workers earning income in both France and Luxembourg has once again been suspended for the fiscal year 2023, providing workers with a temporary reprieve.
This allows cross-border workers to avoid a significant tax increase when filing their declarations in spring 2024. However, it's important to note that this situation is temporary, and their situation is not completely resolved for their 2024 income.
Tram expansion to reach National Stadium
The tram line's southern section is set to be completed in 2024. Luxtram has announced that the final five stops leading to the Luxembourg Stadium will become operational over the course of the year. These include the following five tram stations along the Bonnevoie-Cloche d'Or stretch:
- Scillas
- Howald Train station (interchange)
- Lycée Vauban
- Wassertuerm
- Stadion(interchange)
Le chantier du tram dans le sud de la capitale en 2022. / © Domingos Oliveira / Archives RTL
Electric cars: subsidies to change in 2024
Another change in the country’s mobility policy: after the 31st of December 2023 (the deadline for their initial registration), hybrid cars will lose their eligibility for the subsidy received when purchasing an electric car. The subsidy will then remain at €8,000 for exclusively fully electric cars.
The "subsidies for the purchase of an electric car and other zero-emission technologies will be maintained," promises the government in its coalition agreement. These will be prolonged until June 2024
© Envato
Holidays:toll prices to rise in France
In 2024, Luxembourgish holidaymakers will be confronted with a higher bill as French motorway tolls are set to increase. The increase will be "less than 3%" in 2024, as assured by the French Minister of Transport, Clément Beaune. The change will come into force on the 1st of February.
A new law for sports leave
In 2023, lawmakers voted to better regulate sports leave.Starting January 1st, the new law comes into effect, offering clearer guidelines on eligibility and the circ*mstances under which individuals can benefit from it.
Important dates
Elections 2024
This year we will have two elections: social elections (May 12) and European elections (June 9).
On the political agenda, the Finance Minister will present concrete ideas concerning global tax reform. In parallel, key decisions on pensions and housing can be expected for 2024.
Eurovision Song Contest
And last but certainly not least: After 30 long years Luxembourg is proudly making its comeback to the Eurovision Song Contest. The person who will be representing Luxembourg in Malmö, Sweden from May 7 until May 11 will be revealed on January 27.
Read more -Public holidays and long weekends... When to take your leave in Luxembourg in 2024
