Luxembourg development stuck in lack of decent human resources

Recruiters have welcomed changes to an expat tax regime introduced with the start of the new year, but the measure won’t be enough to attract talent as salaries are losing their competitive edge, they say. The government with the 2023 budget expanded a special tax regime for highly skilled staff hired into Luxembourg from non-EU countries, allowing expats with a gross annual salary of €75,000 to benefit from the scheme, down from €100,000. “It’s hard to predict but my fear is it will be minimal,” said Lieven Lambrecht, HR director at PwC in Luxembourg about the impact of the change. “Even at that level of compensation, Luxembourg is not competitive in terms of purchasing power.” The special tax regime allows non-EU foreigners who meet certain criteria to benefit from a full or partial tax exemption for expenses in kind or cash related to their move to Luxembourg. This includes moving and travel expenses but also accommodation and school fees. The company paying these benefits can declare them as operating expenses, meaning they don’t form part of the highly skilled worker’s income. Housing cost uncompetitive “All positive measures to attract new professionals to Luxembourg are a good thing,” said Maxime Durant, [...]

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