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29.1 Luxembourg Social Security System Overview

Understanding the Social Security System​

Luxembourg's social security system is one of the most comprehensive in Europe, providing extensive coverage for health insurance, pensions, unemployment, family benefits, and other social protections. Both employers and employees contribute to the system through social charges.

Social Security Components​

1. Health Insurance (Assurance Maladie)​

Coverage:

  • Medical care and hospitalization
  • Prescription drugs
  • Dental and vision care
  • Preventive care

Contributions:

  • Employee contribution: 2.8% of gross salary
  • Employer contribution: 2.8% of gross salary
  • Total: 5.6% of gross salary

2. Pension Insurance (Assurance Pension)​

Coverage:

  • Retirement pensions
  • Disability pensions
  • Survivor benefits

Contributions:

  • Employee contribution: 8% of gross salary
  • Employer contribution: 8% of gross salary
  • Total: 16% of gross salary

3. Dependency Insurance (Assurance Dépendance)​

Coverage:

  • Long-term care benefits
  • Dependency support

Contributions:

  • Employee contribution: 1.4% of gross salary
  • Employer contribution: 1.4% of gross salary
  • Total: 2.8% of gross salary

4. Employment Fund (Fonds pour l'Emploi)​

Coverage:

  • Unemployment benefits
  • Job training programs
  • Employment support

Contributions:

  • Employee contribution: 2% of gross salary
  • Employer contribution: 2% of gross salary
  • Total: 4% of gross salary

5. Accident Insurance (Assurance Accident)​

Coverage:

  • Work-related accidents
  • Occupational diseases

Contributions:

  • Employer only: 0.5% - 1.5% of gross salary (varies by industry risk)

Total Social Charges​

Employee Contributions​

Total Employee Social Charges:

  • Health Insurance: 2.8%
  • Pension Insurance: 8%
  • Dependency Insurance: 1.4%
  • Employment Fund: 2%
  • Total Employee: 14.2% of gross salary

Employer Contributions​

Total Employer Social Charges:

  • Health Insurance: 2.8%
  • Pension Insurance: 8%
  • Dependency Insurance: 1.4%
  • Employment Fund: 2%
  • Accident Insurance: 0.5% - 1.5% (varies)
  • Total Employer: 15.7% - 16.7% of gross salary (depending on accident insurance rate)

Combined Total​

Total Social Charges:

  • Employee: 14.2%
  • Employer: 15.7% - 16.7%
  • Combined: 29.9% - 30.9% of gross salary

Social Security Administration​

CCSS (Centre Commun de la Sécurité Sociale)​

Responsibilities:

  • Administers social security system
  • Collects contributions
  • Manages benefits
  • Provides information and support

Reporting:

  • Monthly payroll declarations required
  • Electronic filing through eCDF or CCSS portal
  • Payment of contributions required

Salary Caps​

Contribution Ceilings​

Maximum Salary Subject to Contributions:

  • Health Insurance: €9,000 per month (as of 2025)
  • Pension Insurance: €9,000 per month
  • Other contributions: €9,000 per month

Important: Contributions calculated only on salary up to cap

Example:

  • Gross salary: €12,000 per month
  • Contribution base: €9,000 (capped)
  • Social charges calculated on €9,000, not €12,000

Luxembourg Compliance Note​

Important Requirements:

  • Mandatory participation: All employees must be enrolled
  • Monthly reporting: Payroll declarations required monthly
  • Timely payment: Contributions must be paid on time
  • Accurate calculation: Errors result in penalties
  • Record keeping: Maintain payroll records for 10 years

Common Issues:

  • Calculation errors: Incorrect social charge calculations
  • Late payments: Missing payment deadlines
  • Incorrect reporting: Errors in payroll declarations
  • Missing employees: Not enrolling all eligible employees

Think It Through​

Artisan Boulangerie has an employee earning €3,500 gross salary per month. What are the total social charges (employee + employer)? What is the employee's net salary?

Concepts in Practice​

Social Charges Calculation

Artisan Boulangerie employee payroll:

Gross Salary: €3,500 per month

Employee Contributions (14.2%):

  • Health Insurance (2.8%): €98.00
  • Pension Insurance (8%): €280.00
  • Dependency Insurance (1.4%): €49.00
  • Employment Fund (2%): €70.00
  • Total Employee: €497.00

Employer Contributions (15.7%):

  • Health Insurance (2.8%): €98.00
  • Pension Insurance (8%): €280.00
  • Dependency Insurance (1.4%): €49.00
  • Employment Fund (2%): €70.00
  • Accident Insurance (1%): €35.00
  • Total Employer: €532.00

Total Social Charges: €497.00 + €532.00 = €1,029.00

Employee Net Salary: €3,500 - €497 = €3,003.00

Total Labor Cost: €3,500 + €532 = €4,032.00