Germany also punishes cross -border commuters in premiums
Luxembourg needs workers. To attract some from abroad, Luxembourg has some arguments: high net wages, low wage taxes and levies, the automatic index and tax exemptions for premiums.
The number of cross -border commuters grows, but it is striking: the proportion of German cross -border commuters on the Luxembourg job market is steadily declining. Does that also have to do with German tax legislation? Last year caused a lot of resentment that German tax offices discovered that overtime of German workers who were performed in Luxembourg and are tax -free here can be re -taxed in Germany. The same also applies to tax -free gratifications such as the « Prime Participative ».
In 2021, the profit sharing bonus was introduced as an instrument to attract employees and bind to their company. Under certain conditions, the premium of the employer is exempt from income tax.
An attractive instrument that was still improved in 2025. So far, the employer has been able to spend a maximum of five percent of its net profit for this premium, the upper limit has been raised to 7.5 percent this year. And for employees, the tax -favored profit sharing has been raised from 25 to 30 percent of the gross year.
Why should be paid in Germany
While this also works without any problems with local workers and those from France or Belgium, German cross -border commuters can only benefit to a limited extent, if at all. Because what Luxembourg does not tax, the German tax offices want to tax.
Rather daunting than attractive.
Aleba union
« A percentage exemption instead of a fixed allowance can lead to taxation according to current practice, » writes the Aleba service union. « This could be more daunting than attractive, » said her conclusion.
When asked whether the tax changes in the interests of the company that have occurred since this year, the « Union of the Entreprises Luxembourgeoises » explains: « The changes that were introduced by the tax package ( » Flying Pack « from July 2024) and in 2025 resulted in an increase in upper limits that apply in the area of ’participatory premium’. These developments therefore promote the attractiveness of the regulation and are fully in line with the will of Luxembourg to continue to support the recruitment and binding of talents.
Nevertheless, there is still room for improvements, such as for newly founded companies or companies in the loss zone that cannot use the regulation for your employees. ”
Entrepreneurial association hopes for a quick solution
The UEL is aware that the German tax authorities tax this money because it is a percentage exemption and not a fixed allowance.
« In fact, the German tax authorities recently changed their approach and took the view to tax the profit sharing paid to cross -border commuters, » said the entrepreneurial association. « We hope that a solution can be found quickly between the responsible authorities. » The Luxembourg Ministry of Finance explains that the ball is in Berlin. From there, there was initially no statement due to the new government formation. At least in the case of overtime taxation, it could soon get better for German cross -border commuters. Because the new federal government is planning a tax exemption from overtime. Since last year, the German tax offices have been demanding a taxation of the overtime worked in Luxembourg.
