Can a UK company hire in Luxembourg? What Brexit changed

Yes. A UK company can employ someone in Luxembourg, and Brexit did not remove that ability. The limit is on how, rather than on whether. Work performed in Luxembourg falls under the Code du travail, the employee has to be declared to the Centre commun de la sécurité sociale (CCSS) within eight days of the start date, and income tax is withheld under the retenue d’impôt sur les traitements et salaires. A UK payroll cannot perform any of that.

Two structures answer it. The UK business can form a Luxembourg company of its own and employ directly, or it can use an Employer of Record, which becomes the legal employer of the person while the UK business keeps the role, the salary and the daily direction. Employer of Record Luxembourg is registered to employ there, and that registration is what lets a Luxembourg contract be signed and payroll start in days instead of after a company formation.

One question usually comes first from UK HR teams, and the answer is short. No UK sponsor licence is involved. Sponsorship exists to bring a worker into the UK labour market; here the employment is in Luxembourg, so the UK immigration system is not engaged. Any permission needed is a Luxembourg one, and it attaches to the individual.

The employer side of the question is largely untouched. A UK company could put someone on a Luxembourg payroll before 2021 by forming a Luxembourg company or by using an Employer of Record, and those are still the two practical answers.

Luxembourg employment law applies by reference to where the work is done, not to where the employer is incorporated, so a company in Manchester faces the same Code du travail as a company in Munich once the employee works in Luxembourg. That means the same written contract requirements, the same minimum of 26 working days of paid annual leave on top of 11 public holidays, the same notice periods measured in months, the same sick pay obligation and the same CCSS declaration.

Company ownership is unchanged too. A UK parent can own a Luxembourg société à responsabilité limitée (SARL) exactly as it could before. The one structure closed to it is the simplified SARL-S, which may only be held by individuals, so any corporate parent uses the ordinary SARL instead.

The commercial reasons UK businesses hire in Luxembourg are the same as they were. A candidate worth having already lives there or commutes in from Belgium, France or Germany. A client contract requires a named person employed under Luxembourg law. A fund, treasury or regulatory function has to sit in the Grand Duchy.

Two things changed, and both concern the person hired rather than the hiring company. The first is immigration status. A UK national is now a third-country national for Luxembourg purposes: an EU, EEA or Swiss citizen needs no work permit and no residence permit and only registers at the commune, while a UK national who is not already resident needs an authorisation obtained before arriving.

Two routes matter to an employer. The salaried worker route begins with a vacancy declaration to ADEM, the public employment service, filed before the job is advertised anywhere, then a labour market test and a certificate valid for three months. The employee applies for an autorisation de séjour temporaire before entering the country, and the ministry’s stated response time is in principle four months at most. The EU Blue Card, the carte bleue européenne, skips the labour market test for higher-paid roles: the 2026 gross annual salary threshold is €65,652 and the contract has to run at least six months. Our guide to hiring non-EU workers in Luxembourg sets out every step.

Plan that timetable in months rather than weeks. No authority publishes an end-to-end average, but the published component maxima put the salaried worker route at roughly four to seven months, and less where the occupation sits on ADEM’s shortage list. A UK national already lawfully resident in Luxembourg before the end of the transition period holds protected rights under the Withdrawal Agreement, so check the person’s residence document before assuming any of this applies.

The second change is the basis of social security coordination. The EU regulations that coordinate social security between member states no longer govern the UK relationship, which now rests on the UK–EU Trade and Cooperation Agreement. For the ordinary hire this is quiet: a person who lives in Luxembourg and works for an employer registered there is declared to the CCSS and insured in Luxembourg like anyone else. The cases needing care are the ones straddling both systems, such as an existing UK employee moving across, a short posting, or someone who keeps working part of the week in the UK. Confirm that position in writing with the CCSS or a specialist adviser before the start date.

Three routes exist, and the choice turns on speed, headcount and how long the Luxembourg presence will last. Two are sound; the third is the one UK companies reach for first.

The first route is a company of your own. A SARL takes €12,000 of share capital, which can now be deferred for up to twelve months under the law of 18 May 2026, plus an autorisation d’établissement (business permit) at €50 with a three-month statutory target from a complete file. Expect eight to fourteen weeks before a first legal payroll, and year-one running costs outside the capital of roughly €3,300 to €17,000.

The second route is an Employer of Record. The EOR is the legal employer: it issues the Luxembourg contract, files the déclaration d’entrée with the CCSS, obtains the fiche de retenue d’impôt (tax card) from the Administration des contributions directes (ACD), calculates the monthly withholding, pays both sides’ contributions and keeps the leave, sickness and termination records. The fee starts at €499 per employee per month, charged flat rather than as a percentage of salary, and a contract is usually ready within hours of the salary and start date being agreed.

The third route is to engage the person as a contractor and take invoices. It looks cheap and carries the most exposure. Luxembourg decides employment status on how the relationship actually runs rather than on the wording of an invoice, so someone who works to your instructions, inside your hours and your structures, can be treated as an employee whatever the paperwork says. We set that out in full in our note on misclassification risk in Luxembourg.

Employer social security runs at about 13.29% of gross for a standard commercial employer, within a full range of roughly 12.5% to 15.3% once the accident bonus-malus factor and the Mutualité class are taken into account. The employee pays 12.95%. Most branches stop at the plafond cotisable, the contribution ceiling, which is €13,856.63 a month and €166,279.56 a year from 1 June 2026, while the contribution dépendance is uncapped and paid by the employee alone.

A worked example makes it concrete. On a gross salary of €90,000 a year, employer contributions at 13.29% come to €11,961, for a total employer cost of €101,961. The employee here is a single person in tax class 1, resident in Luxembourg, with no dependants: they pay €11,538.60 in social security and €19,701.54 in income tax including the 7% solidarity surcharge, and take home €58,759.86 a year, or €4,896.65 a month. The figures use the parameters in force from 1 June 2026, the neutral accident bonus-malus factor, the Mutualité class a new employer starts in and standard deductions only. At €60,000 gross the same rate gives a total employer cost of €67,974.

Pay is calculated over twelve monthly salaries. A thirteenth month is not statutory in Luxembourg; it becomes an enforceable right only through the contract, a collective agreement or a settled practice known as usage constant, so the contract should say plainly which of those, if any, applies. Market benefits sit on top, chiefly chèques-repas (meal vouchers) at a face value of up to €15, of which the exempt employer share is €12.20, and company cars, taxed as a benefit in kind.

Every one of those is a euro figure, so the sterling cost of a Luxembourg employee moves with the exchange rate on top of any Luxembourg increase.

Notice comes first, because it is measured in months rather than weeks. An employer dismissing gives two months under five years of service, four months from five to ten and six months at ten or more, and an employee resigning gives half of that, where UK statutory notice is set in weeks and builds up week by week. The post fixes the start date: notice runs from the 15th where the letter is posted before the 15th, and from the 1st of the following month where it is posted on or after it. A separation payment, the indemnité de départ, becomes due from five years of service. We cover the procedure in terminating employment in Luxembourg.

Paid leave and sick pay come next. The Luxembourg minimum is 26 working days a year and the 11 public holidays sit on top of it, where the UK minimum is a single combined figure a UK employer is used to counting public holidays inside. Sick pay is the larger surprise: the employer pays full salary until the end of the calendar month in which the 77th day of incapacity falls, counted in calendar days over a rolling 18 months, which works out at roughly 11 to 15 weeks. From the month after that, the Caisse nationale de santé (CNS) takes over and pays the employee directly. The relief is that the Mutualité des employeurs reimburses the employer 80% of the gross pay and the employer contributions on it, rising to 100% during the période d’essai (the probation period).

The contract is more formal than a UK written statement. Luxembourg requires it in writing, in two signed originals with one held by each side, by the first day of work at the latest, carrying the particulars set out at Article L.121-4 of the Code du travail and drawn up in a language the employee genuinely understands. English is accepted where both sides read English, and there is no grace period to send it on afterwards.

The last difference has no UK equivalent. Luxembourg salaries are index-linked: when the six-month moving average of the national consumer price index rises 2.5% above the previous threshold, pay across the country rises by 2.5% from the first of the following month. The index is published monthly by STATEC, and when it triggers, the rise is applied by law rather than agreed. The applicable index has stood at 992.24 since 1 June 2026. The note on Luxembourg wage indexation explains the mechanism in full.