Profit-Sharing Bonus in 2025: A Win-Win for Employers and Employees

Starting in 2025, companies will benefit from a more attractive profit-sharing bonus scheme designed to boost employee retention and motivation. Under the updated framework, businesses can now allocate up to 7.5% of their net profits from the previous year toward employee bonuses, an increase from the previous 5% limit.

For employees, the maximum bonus they can receive has also been raised, moving from 25% to 30% of their annual salary (excluding benefits). Additionally, employees continue to enjoy a 50% tax exemption on their profit-sharing bonuses, making it a highly beneficial incentive under Luxembourg tax regulations.

This enhanced scheme not only helps businesses retain top talent but also fosters a culture of reward and loyalty, positioning companies for long-term success. With these changes, Luxembourg tax policies further support businesses in creating competitive compensation packages.