The Profit-participating Bonus: A guide for employers

Employers, with the profit-participating bonus, you can reward your employees’ performance by granting them a bonus with tax benefits at their level.

The profit-participating bonus was introduced on 1 January 2021. This document sets out the main terms and conditions of implementation and also outlines the various subsequent legislative changes. It is intended to guide Luxembourg companies in the application and proper implementation of these provisions.

A number of changes to the profit-participating bonus regime were introduced as part of the July 2024 tax package (“Entlaaschtungs-Pak”), which is aimed at strengthening competitiveness and purchasing power. These changes are presented in this document. The tax package is still at the draft stage; once adopted, the relevant measures will take effect from 1 January 2025.

Publication date: December 2024​

This document will be updated regularly to take into account any new developments.

Document prepared by the UEL with the support of the Chamber of Commerce, in collaboration with the ABBL, ACA, Chambre des Métiers (Chamber of Crafts and Trade), Fédération des Artisans, FEDIL, Horesca and Luxembourg Confederation.​

This document is intended merely for information purposes and does not claim to be exhaustive. The information contained in this document is general in nature and is not intended to address the specific situation of a particular individual or company. This information cannot and should not be used as the basis for decision-making without seeking the prior advice of a professional and without a detailed analysis of each situation.