Significant Wage Increase and Tax Exemption Announced in Luxembourg
Luxembourg - July 20, 2024
Luxembourg is set to see a remarkable increase in its minimum wage by the end of this year. This boost, scheduled for the fourth quarter, will elevate the minimum wage for unskilled workers to €2,635.21 per month, up from the current €2,570.93. Skilled workers will see their minimum wage rise to an unprecedented €3,162.23 per month.
Despite already offering the most attractive minimum wage in Europe, the Luxembourg government is planning a significant tax reform. Specifically, the government intends to exempt individuals in Tax Class 1 from paying taxes. This adjustment will be implemented through the modification of the Minimum Social Wage Tax Credit (CISSM), which is automatically applied to paychecks for eligible individuals. This initiative, originally introduced by the previous government following the 2018 elections, aims to boost the incomes of the lowest-paid workers by €100 monthly.
From January 2025, workers earning the unskilled minimum wage in Luxembourg will no longer pay any taxes. According to estimates from the General Inspectorate of Social Security (IGSS) in March 2022, around 38,000 people, representing 8.7% of the country's workforce, will benefit from this change.
This government effort to support the purchasing power of low-income individuals comes at a time when, despite the higher minimum wage compared to other parts of Europe, it still does not guarantee a "decent standard of living." Furthermore, in many sectors such as hospitality, agriculture, and trade, as well as among certain demographic groups, earning the lowest wage remains a significant challenge. A study by the Chamber of Employees revealed that one in four workers continues to earn the minimum wage even after ten years of employment.
These changes mark a substantial step towards improving the financial well-being of Luxembourg's low-income workers, underscoring the government's commitment to addressing economic disparities and enhancing living standards.
Lyten to Establish European Headquarters in Luxembourg
Luxembourg - July 20, 2024
The Luxembourg government has announced its decision to invest in Lyten, a global leader in lithium-sulfur battery technology. This initiative, described as a "success story" by three Luxembourg ministers and Lyten's CEO, marks a significant step in the country's commitment to innovation and sustainability.
Luxembourg will invest €15 million in the American company Lyten, which had announced last year its intention to establish its European headquarters in Luxembourg. This investment will be made through the Luxembourg Future Fund 2 (LFF 2), jointly financed by the National Credit and Investment Institution (SNCI) and the European Investment Fund (EIF). The announcement was made by Xavier Bettel, Minister of Foreign and European Affairs; Gilles Roth, Minister of Finance; and Lex Delles, Minister of the Economy, SMEs, Energy, and Tourism, who are all responsible for SNCI, alongside Lyten CEO Dan Cook.
Lyten specializes in sustainability and advanced battery production. CEO Dan Cook stated, "We can reduce the weight of batteries by 40 to 70 percent, making them ideal for all vehicles, including cars, trucks, drones, and many more."
The three Luxembourg ministers highlighted the numerous benefits of this project. They emphasized that this investment is a forward-looking move towards digitization and sustainability, which will expand Luxembourg's financial expertise. They also noted that the project aligns with Luxembourg's economic goals, providing opportunities for research and development, reducing carbon emissions, and strengthening Luxembourg's position as a hub for major corporate headquarters.
Following a visit to the University of Luxembourg and the Luxembourg Institute of Science and Technology (LIST), Dan Cook did not rule out the possibility of manufacturing Lyten's products in Luxembourg.
This partnership is set to enhance Luxembourg's reputation as a leader in innovation and sustainability while offering significant economic and environmental benefits.
Hiring at Hesperange Municipality Canceled by Minister Due to Familial Relations
Luxembourg - July 20, 2024
Léon Gloden, Luxembourg's Minister of Home Affairs, has annulled the Hesperange Municipal Council's decision to hire a "Municipal Pact Coordinator." This decision came after objections from opposition parties and a legal review. Opposition parties raised concerns about the selected candidate's lack of required qualifications and familial connections to Mayor Marc Lies of the Christian Social People's Party (CSV).
The position required specific qualifications, including a bachelor's degree in social sciences or intercultural studies and at least three years of professional experience in relevant fields. The selected candidate failed to meet these criteria. Moreover, allegations of a conflict of interest due to the familial relationship between the mayor and the candidate raised concerns about transparency and fairness in the hiring process.
Opposition parties welcomed the minister's decision, viewing it as a victory for administrative integrity. This action underscores the importance of transparency and fairness in municipal hiring processes in Luxembourg. It has been hailed by opposition parties as a positive step towards enhancing hiring standards across the country.
Luxembourg Announces 10% Increase in Living Allowance and Tripling of Energy Bonus
Luxembourg - July 20, 2024
The Luxembourg government has unveiled significant changes to social benefits for low-income families. These changes include a 10% increase in the living allowance and a tripling of the energy bonus, aimed at supporting families as energy price caps are set to end later this year.
10% Increase in Living Allowance
The government has announced that the living allowance for low-income individuals will increase by 10%. For instance, a single individual earning up to €2,710 will now receive €1,817 instead of €1,652, an increase of €165. Similarly, a two-person household earning up to €4,065 will receive €2,272, up from €2,065, an increase of €207. A four-person household with an income up to €5,692 will receive €3,182, up from €2,891, an increase of €291.
Tripling of Energy Bonus
The energy bonus, designed to help families cope with high energy costs, will be tripled. The income threshold for receiving this bonus is set at 25% higher than the threshold for the living allowance. Consequently, a single individual earning up to €3,388 will receive €600 instead of €200. A two-person household earning up to €5,082 will receive €750 instead of €250, and a four-person household earning up to €7,115 will receive €1,050 instead of €350.
New Payment Process Improvements
To streamline the payment process, these financial aids will now be automatically paid to recipients of the social inclusion income (Revis). This change addresses the current issue where over 30% of eligible individuals do not apply for assistance. Additionally, the National Solidarity Fund (FNS) will share information about living allowance recipients with municipalities to facilitate automatic payments.
Other Key Changes
Other important changes include reducing the residency requirement in Luxembourg from 12 months to 3 months for eligibility. The application deadline has been extended from October 31 to December 31. Applicants can now apply twice a year to accommodate potential changes in their financial situation. Furthermore, income earned by individuals under 30 who live with their parents will not be considered in the eligibility assessment for these benefits.
These new changes to social benefits reflect the Luxembourg government's commitment to supporting low-income families and improving their living conditions.
Encouraging Tenants to Report Housing Violations to Municipalities
Luxembourg - July 20, 2024
Four French border towns have urged property owners to have their homes inspected by local authorities before renting them out. This initiative aims to tackle the issue of uninhabitable homes and will be implemented in Audun-le-Tiche, Villerupt, Ottange, and Thil starting January 2025. The goal is to combat uninhabitable housing and exploitative landlords. Property owners must have their homes inspected by local authorities before renting them out. Failure to comply will result in the property's address being reported to the Family Allowance Fund (CAF), which will halt housing benefit payments to the owner.
Reactions in Luxembourg
Gilles Baum, the president of Luxembourg’s Housing Commission, finds this plan "an interesting idea." He noted that some exploitative landlords in Luxembourg charge over €1,000 per month for 25 square meter units. Currently, municipalities in Luxembourg lack the ability to inspect housing for health and safety standards before they are rented out.
According to the law passed on December 20, 2019, property owners in Luxembourg must declare their property to the local municipality before renting it out and specify the maximum number of occupants. Additionally, they must provide a floor plan with this declaration. However, the Pirate Party claims that many owners do not comply with this requirement, and the law is not effectively enforced.
Issues in Law Enforcement
Marc Goergen, a member of the Pirate Party, recently raised a query regarding this issue. In response, Interior Minister Léon Gloden confirmed that the government prioritizes the current system, which relies on tenants reporting violations to the municipality. The municipality then decides whether an inspection is necessary. If repairs are needed, the municipality can order the owner to make improvements within a specified time frame or even order the property to be closed. In the event of a closure, the owner or operator must arrange for the tenants' relocation.
Encouraging Tenants to Report Violations
The Interior Minister also mentioned that the government plans to reactivate an interministerial working group on housing health and safety standards and review the current law. However, reporting violations requires tenants to be courageous, as they often fear losing their housing. Opposition parties have proposed increasing the number of emergency housing units provided by the government to mitigate this issue. According to a 2021 survey by Statec, nearly one-sixth of households in Luxembourg reported living in uninhabitable conditions.
Encouraging tenants to report violations not only improves their quality of life but also prevents further infractions and exploitation. Common issues include renting out uninhabitable homes without meeting health and safety standards, charging exorbitant rents, failing to provide essential services such as necessary repairs, inadequate ventilation, mold, and damp walls, serious heating and cooling system issues, and not providing legal rental documents. Reporting these violations to municipalities ensures that landlords are held accountable and housing conditions are improved.
Important Notice: New Rental Regulations Effective from August 1 in Luxembourg
Luxembourg - July 20, 2024
Starting August 1, new rental regulations will take effect in Luxembourg, aiming to reduce initial costs for tenants and ensure equal sharing of real estate agency fees between landlords and tenants. Additionally, new rules for cohabitation agreements have been established.
The Luxembourg Chamber of Deputies has passed these significant amendments to the rental laws, which will be implemented by the Ministry of Housing. Below are the key changes introduced by these new regulations.
Equal Sharing of Real Estate Agency Fees
The Ministry of Housing announced that henceforth, the commission fees for real estate agencies will be split equally between landlords and tenants, on a 50/50 basis. This change is expected to alleviate the financial burden on tenants significantly.
Abolition of the "Luxury Housing" Concept
One of the critical changes is the elimination of the "luxury housing" category. Previously, this allowed landlords to bypass the rent cap set at 5% of the housing investment value. The government has stated that in the current market conditions, high-end luxury housing does not require special legislative protection, benefiting tenants by preventing excessive rent charges.
Reduction of Rental Deposit to Two Months
The new law reduces the maximum legal rental deposit from three months to two months. This adjustment will lower the upfront costs for tenants moving into new housing. Moreover, specific conditions have been outlined for the return of the rental deposit, with penalties for landlords who fail to comply with the stipulated deadlines.
Rent Increase Cap at 10% Over Two Years
The new legislation abolishes annual rent increases and instead imposes a biennial cap of 10% on rent hikes. This measure aims to protect tenants from unchecked rent increases and provides stability against unpredictable market fluctuations.
Mandatory Written Rental Contracts and Adherence to Rent Cap
All rental agreements must now be in written form and must include certain mandatory provisions, such as adherence to the legal rent cap of 5% of the housing investment value. This change promotes transparency and ensures the legality of rental contracts.
New Regulations for Cohabitation Agreements
The law introduces specific regulations for cohabitation agreements, which were previously unregulated. A single "cohabitation contract" must be established between the tenants and the landlord. Cohabitants are also required to create a written "cohabitation agreement" detailing the terms of their shared living arrangements.
If a cohabitant wishes to be released from their obligations before the end of the contract, they must provide a three-month notice to both the landlord and the other cohabitants. This notification must be sent as a registered letter with acknowledgment of receipt. The departing cohabitant is responsible for finding a replacement before the notice period ends. If a replacement is not found, the cohabitant must demonstrate that they made sufficient and effective efforts to find a new tenant.
These new regulations are designed to improve rental conditions and protect tenant rights in Luxembourg. They are expected to have a positive impact on the country's housing market by promoting fairness and transparency.
Historic Visit of Pope Francis to Luxembourg Scheduled for September
Luxembourg - July 20, 2024
Pope Francis, the leader of the Catholic Church, will make a historic visit to Luxembourg in September 2024. The detailed itinerary and activities for his visit have been officially announced.
A Historic Day: September 26, 2024
On September 26, Luxembourg will welcome one of the world's most prominent figures. Pope Francis, at the invitation of the Grand Ducal Court, will visit the country. His arrival at Luxembourg's Findel Airport is scheduled for 10 AM, where he will be greeted by the Grand Duke, the Grand Duchess, and the Prime Minister.
Meeting with Luxembourg Authorities
At 11 AM, Pope Francis will proceed to the Grand Ducal Palace for a one-hour meeting with the Duke and Duchess. Following this, he will head to the Cercle Cité in Ville-Haute to meet with national officials and representatives of civil society.
Journey Through the City in the "Popemobile"
One of the highlights of this visit will be the Pope's tour through Luxembourg City in his famous "Popemobile." This event is scheduled from 12:45 PM to 1:15 PM, covering a route through the city center.
Gathering with the Faithful at the Cathedral
At 4:30 PM, Pope Francis will meet with Luxembourg's faithful at Notre-Dame Cathedral. During this gathering, young people will welcome him with poetry and dance, highlighting the religious life of the diaspora. The Pope will also deliver a speech and receive a gift from the Luxembourg Church, including a financial contribution to the Dicastery for Charity's works.
Continuing the Journey to Belgium
At 6:15 PM, Pope Francis will depart Luxembourg by plane to continue his journey to Belgium. In Belgium, he is scheduled to lead a religious ceremony at the Roi Baudouin Stadium in Brussels on Sunday morning.
This visit marks a significant moment for Luxembourg, reflecting the country's deep ties with the Catholic Church and the global influence of Pope Francis.
Tax Cuts: How Much Will You Benefit?
Luxembourg - July 20, 2024
Finance Minister Gilles Roth has announced a package of tax cuts set to take effect on January 1, 2025. This package includes significant financial relief for single-parent families.
Changes in Tax Rates
These decisions affect not only domestic taxpayers but also cross-border workers, businesses, and the financial sector. “This series of measures aims to improve purchasing power, competitiveness, attractiveness, and support growth and social cohesion,” explained the minister. He emphasized that the reductions particularly benefit Tax Class 1a, which includes single-parent families at risk of poverty, a pressing issue the government aims to address. The minister highlighted that these measures are “not a blind gamble but an investment in our citizens, businesses, and future.”
Details of the Tax Reductions
The government has approved sixteen tax measures, to be presented in a legislative bill. The overall value of these measures exceeds half a billion euros, precisely €535 million.
Tax Class 1a
A single-parent family with one child and an annual income of €50,000 will pay €2,890 in taxes next year. This is €1,794 less than this year (-38.3%) and €2,503 less than in 2023 (-46.4%).
If this family benefits from the single-parent tax credit, they will receive €614 in tax credits, compared to paying €2,179 in 2024 and €2,888 in 2023, resulting in a reduction of over 100%.
A retiree with an annual income of €50,000 will pay €4,207 in taxes next year, which is €2,173 less than this year (-34.1%) and €2,883 less than in 2023 (-40.7%).
Tax Class 1
A single individual with an annual income of €50,000 will pay €5,208 in taxes next year, which is €502 less than this year (-8.8%) and €927 less than in 2023 (-15.1%).
Tax Class 2
A family with two children and an annual income of €75,000 (with two-thirds attributed to one parent and one-third to the other) will pay €4,024 in taxes in 2025. This is €444 less than this year (-9.9%) and €694 less than in 2023 (-14.7%).
Corporate Tax Relief
The corporate income tax rate will be reduced from 17% to 16%, lowering the overall tax burden from 24.94% to 23.87%.
For small businesses, the corporate income tax rate will decrease from 15% to 14%, reducing the overall tax burden from 22.8% to 21.73%.
Tax Benefits for Cross-Border Workers and Youth
Cross-border workers will receive a tax credit for overtime, capped at €700 per year.
To attract talent, individuals relocating to Luxembourg will benefit from a 50% tax exemption on annual income, capped at €400,000.
Young people under 30 will enjoy a tax exemption of up to 75% on new bonuses, ranging from €2,500 to €5,000.
Boosting Purchasing Power and Economic Benefits
Overall, these tax cuts will enhance household purchasing power and support economic growth. Tax reductions for businesses will also increase Luxembourg's competitiveness and economic attractiveness. These changes promise benefits not only for households but also for businesses and the entire national economy.
Multi-Million Euro Embezzlement at Caritas Charity in Luxembourg
Luxembourg - July 20, 2024
In a large-scale fraud and embezzlement case, the charity organization Caritas, which aids the needy in Luxembourg, has announced that it has filed a complaint after discovering a financial theft amounting to several million euros. The organization confirmed that around 60 million euros have been stolen from its funds.
According to obtained information, the "Fondation Cécile Ginter" and "Caritas Accueil et Solidarité" are also involved in this financial scandal. However, "Caritas Jeunes et Familles" has confirmed that, being a completely separate legal entity from Caritas Luxembourg, it is not involved in this matter.
The projects affected by this financial embezzlement include migrant reception structures and international cooperation projects. The financial transfers were made over the past six months from Luxembourg to a Spanish bank, with amounts ranging between 250,000 and 500,000 euros.
Caritas has announced that it filed this complaint with the Luxembourg court on July 17, 2024, and investigations are ongoing. At this stage of the case, the Luxembourg public prosecutor's office has requested "the opening of a judicial case on charges of forgery and use of forged documents, fraud, breach of trust, internal theft, computer fraud, and money laundering." Several sections of the judicial police are responsible for investigating this case. The Financial Intelligence Unit (CRF) and the Asset Recovery Office (BRA) are also involved in these investigations.
In a press release, the Luxembourg government stated that it "strongly condemns any financial theft, especially when it occurs in a charity organization that works daily for the benefit of the most vulnerable and needy individuals in society," and added that it is working to "identify solutions to ensure the continuity of support activities for the needy in Luxembourg".
