Bonus Surge
Participation bonuses have gained significant popularity among employees in Luxembourg. When the tax-favoured scheme was introduced in 2021, around 14'000 employees benefited from the measure. By last year, the number had soared to more than 43'000, indicating that over three times as many people took advantage of the bonus in just five years.
Employers can offer their staff a participation bonus, which, under certain conditions, can be up to 50% tax-free. The regime was expanded in 2025, making the measure even more attractive for both companies and employees.
As a result, the total value of related tax exemptions has increased sharply, from around EUR63 million to EUR215 million. The resulting tax shortfall for the state, calculated at an average rate of 25%, has also grown significantly, from EUR16 million to nearly EUR54 million.
These figures were published on Tuesday in Finance Minister Gilles Roth's written response to a parliamentary question from Green Party MP Sam Tanson.
Three times the employees, three times the exemptions, and a tax shortfall that has more than tripled. The question is whether the scheme is generating enough economic activity to justify the revenue the state is letting go.