Prime participative, 1 year later: review of the situation



The Luxembourg government has introduced in 2021 the tax regime of the profit sharing bonus “prime participative” as a tool to retain employees in their company. To this end, all employees who receive such a bonus from their employer can benefit from an income tax exemption of 50% of its amount, under certain conditions.

UEL conducted a survey among its members in order to understand the use that companies have made of this new tool and to evaluate its effectiveness. 260 companies (from 12 different sectors of activity) took part in this survey.

The results show that only one third of the participating companies stated that they were able to grant the “prime participative” scheme to their employees in 2021. And only half of them expect to do so in 2022. According to the companies surveyed, this is mainly due to the fact that the eligibility conditions and limits of the scheme restrict the number of companies that can actually offer this benefit to their employees.

Consequently, UEL considers that it would be advisable to adapt the terms of application of this tax regime in order to allow a greater number of Luxembourg employees to benefit from it. It is indeed crucial to have a real incentive and efficient tool in order to attract in a sustainable way the workforce that companies need to ensure the development of the Luxembourg economy.