Basics

Updated on August 13, 2025

Understanding Your Luxembourg Payslip: Making Sense of Taxes, Leave, and Pay

Learn to read your Luxembourg payslip. Understand taxes, social contributions, leave balances and net pay calculations step by step.

Let's be honest. Luxembourg payslips are confusing. You get this document every month, and no two companies seem to format them the same way. Some have everything crammed into sections, others spread things out differently. Luxembourg law says payslips need to show you how your salary was calculated and how they got to your net amount, but it doesn't dictate the format.

That's why one company's payslip might look completely different from another's. They're all technically correct as long as you can follow the money trail from gross to net.

But here's the thing: once you figure it out, it's actually pretty straightforward. And more importantly, it's your money we're talking about, so it's worth understanding where every euro goes.

Your basic details

This part's easy. Top of the page, you've got all the obvious stuff, your company's name, your name, your address. The payslip period (which month it covers). Your employee number, social security number, that sort of thing.

Most of this never changes, but it's worth a quick glance. We've seen people get the wrong payslip before, not fun when you're trying to figure out why your salary looks different.

Your tax class is up there too. If you got married, divorced, had kids, or moved in with someone, this might need updating. The tax office (ACD) handles that, and trust me, it can make a real difference to what you take home.

Time off tracking

Here's where payslips get interesting and inconsistent. Depending on your company's payroll provider, your leave info might be right up top, buried in the middle, or stuck at the bottom. Some show it in hours, others in days. There's no standard format because Luxembourg law doesn't require one.

Most commonly you'll see it in hours (so 26 vacation days becomes 208 hours), but don't be surprised if your payslip just shows regular days. It really depends on what system your HR department uses.

Whatever format yours uses, you'll typically find:

Leave carried over from last year (if any)
New leave you earned this year
Extra time off from overtime compensation
What you've already used
Your remaining balance

Pro tip: if your balance looks wrong, this is usually where the problem is. Maybe HR forgot to add your carried over time, or there's a mistake in how much you took for that long weekend in Paris.

Working hours and gross pay

This section shows how they calculated your gross salary this month.

If you're on a fixed salary, it's pretty boring, same hours, same pay, month after month. But if you're hourly or you did overtime, this is where you'll see the differences.

They'll show your hourly rate, how many hours you're supposed to work, how many you actually worked, and boom, there's your gross salary before they start taking chunks out of it.

Social security contributions

Okay, here's where everyone's eyes start glazing over. But stick with us because this is important.

Every single person working in Luxembourg pays into three big pots:

Health insurance – This is your health insurance. It's split into two parts: "care" (for when you need to see a doctor) and "cash" (for when you're sick and can't work but still need to get paid). Everyone pays this, no exceptions.
Pension Fund – Your future retirement money. The government basically forces you to save for when you're old, which honestly isn't the worst idea. You pay a percentage, your employer matches it.
Dependency Insurance – Long-term care insurance. Small amount, but if you ever need care when you're older, you'll be glad it exists.

These aren't fixed amounts, they're percentages of your salary. So the more you earn, the more you pay. Fair? Debatable. Reality? Absolutely.

Deductions and allowances

Here's something that trips people up: there's a difference between deductions and contributions.

Your social security contributions (what we just talked about) are taken directly from your gross salary and reduce what you actually receive.

But deductions like travel expenses (frais de déplacement) from your tax card work differently.

These aren't taken from your paycheck. Instead, they reduce your taxable income, which means you pay less tax.

The same goes for joint allowances (AC) on your tax card. They lower the amount of income that gets taxed, but you still see your full gross salary before tax calculations.

Income tax and credits

This is where the Luxembourg tax system shows up, and it's... well, it's complicated. Your taxable income isn't always the same as your gross salary. Luxembourg has specific rules about what counts as taxable income and what doesn't.

They start with your total income (salary, bonuses, benefits), then subtract things like your social security contributions and certain professional expenses. What's left is your taxable income, that's what they use to look up your tax rate on the official tax scale (barème de l'impôt) and calculate how much to withhold this month.

But here's the good part, tax credits. Almost everyone gets the CIS (basic employee credit), you just need to earn a minimum per year to qualify. But if, as of 2025, you're making over 80.000€ annually, you won't get it. If you don't earn much, you might get CISSM too. Got kids? More credits. Married? Different credits depending on how you file.

The system figures this out automatically based on your tax class, which is why getting that right matters.

Your final take-home pay

After all the deductions and taxes, what's left is what actually shows up in your bank account.

Sometimes you'll see extra stuff here, bonuses, meal voucher allowances, travel reimbursements. These might show up as "NET with divers" or something similar.

The very bottom line, "Left to pay" - that's your real salary. The number that matters when you're figuring out if you can afford that new apartment in Kirchberg.

Check these each month

Look, we know most people just glance at the final number and file the payslip away. But you should actually check a few things:

Working hours correct? Especially if you did overtime or took time off.
Leave balance making sense? This is where most payslip disputes start.
Tax class still right? Life changes, tax situations change.
Social contributions look normal? They should be consistent percentages.
Final amount what you expected? If not, figure out why.

Found something wrong? Don't wait. Email HR or your manager right away. Much easier to fix this month's payslip than to sort out six months of mistakes later.

Modern payroll makes it easier

If your company uses a payroll platform like Salary.lu, you're in good hands. These platforms handle all the Luxembourg-specific calculations automatically, and the payslips are usually clearer.

Plus you can download old payslips, check your leave balance online, and get help if something looks off, all in one place. Makes life easier which means fewer errors, clearer payslips, and better peace of mind.

Simple as that

Honestly, Luxembourg payslips look scarier than they are. Once you know what you're looking at, you can spot problems quickly and understand exactly where your money goes.

Next time your payslip arrives, you won't have to squint at it wondering what all those numbers mean. You'll know exactly what you're looking at.

And if something looks off? Now you know where to look first. And if it's still not clear? Drop us a line at info@salary.lu