Skip to main content

Chapter 29 – Exercises & Cases

Multiple Choice Questions​

  1. Total employee social charges in Luxembourg are: a) 12% b) 14.2% c) 16% d) 18% Answer: b) Total employee social charges are 14.2% of gross salary.

  2. The contribution ceiling for social charges is: a) €7,000 per month b) €8,000 per month c) €9,000 per month d) €10,000 per month Answer: c) The contribution ceiling is €9,000 per month (as of 2025).

  3. Employer social charges range from: a) 12% - 13% b) 14.2% - 15.2% c) 15.7% - 16.7% d) 17% - 18% Answer: c) Employer social charges range from 15.7% - 16.7% depending on accident insurance rate.

  4. Meal vouchers are exempt from social charges up to: a) €8.00 per day b) €10.80 per day c) €12.00 per day d) €15.00 per day Answer: b) Meal vouchers are exempt up to €10.80 per day (as of 2025).

  5. The minimum wage for skilled workers is: a) €2,500 per month b) €2,570.93 per month c) €3,000 per month d) €3,085.12 per month Answer: d) The minimum wage for skilled workers is €3,085.12 per month (as of 2025).

  6. Payroll declarations must be filed by: a) 10th of following month b) 15th of following month c) 20th of following month d) End of following month Answer: b) Payroll declarations must be filed by 15th of following month.

  7. Account 641 in PCN is used for: a) Employer social charges b) Salaries and wages c) Social charges payable d) Bank account Answer: b) Account 641 is used for salaries and wages.

  8. Overtime pay for hours beyond the first 2 hours is: a) 125% of regular rate b) 150% of regular rate c) 175% of regular rate d) 200% of regular rate Answer: d) Overtime pay for hours beyond the first 2 hours is 200% of regular rate.

  9. Standard vacation entitlement is: a) 20 working days b) 25 working days c) 30 working days d) 35 working days Answer: b) Standard vacation entitlement is 25 working days per year.

  10. Luxembourg has how many public holidays? a) 9 b) 10 c) 11 d) 12 Answer: c) Luxembourg has 11 public holidays.

Questions​

  1. Explain Luxembourg's social security system. What are the main components and contribution rates?

  2. What is the difference between an employee and an independent contractor? Why is correct classification important?

  3. What components are included in gross salary? How do allowances and benefits affect gross salary?

  4. How are social charges calculated? What is the contribution ceiling and how does it work?

  5. Explain payroll accounting in PCN. What accounts are used and how are journal entries recorded?

  6. What are the payroll reporting requirements in Luxembourg? When must declarations be filed?

  7. How are expense reimbursements treated for social charge purposes? What conditions must be met for exemption?

  8. What are the minimum wage requirements in Luxembourg? How do rates differ for skilled vs. unskilled workers?

  9. Explain overtime rules in Luxembourg. What are the overtime pay rates?

  10. What are the vacation and public holiday entitlements for employees in Luxembourg?

Note: Complete solutions are available in the solutions manual.

End of Chapter 29 Exercises