Frequently asked questions
Direct answers to the most common questions on Employer of Record in Luxembourg.
What is an Employer of Record (EoR)?
An EoR is a third-party company that becomes the legal employer of a worker on behalf of a client company. The EoR handles payroll, social contributions, declarations and statutory obligations, while the client retains operational direction of the work.
Is the EoR scheme regulated by a dedicated statute in Luxembourg?
No. There is no equivalent of the French portage salarial in Luxembourg. EoR arrangements operate under ordinary labour law, typically using temporary agency work (articles L.222-1 et seq. of the Labour Code) as the operational legal vehicle.
Which authorities supervise EoR activity in Luxembourg?
The Inspection du travail et des mines (ITM) for labour law, the Centre commun de la sécurité sociale (CCSS) for social security, and the Administration des contributions directes (ACD) for income tax withholding.
Can a foreign company hire in Luxembourg without a subsidiary?
Yes. An EoR allows a foreign company to hire one or several employees in Luxembourg without setting up a local entity. The EoR is the legal employer; the foreign company is the client and directs the work operationally.
How are cross-border workers treated?
Cross-border taxation is governed by bilateral tax treaties between Luxembourg and France, Belgium and Germany. Social security follows EU Regulation 883/2004, with A1 certificates documenting the applicable regime. Specific telework thresholds apply.
How long can an EoR assignment last?
There is no absolute legal limit when the arrangement is anchored in ordinary labour law, but successive long assignments raise requalification risks. Temporary agency work has stricter motive-based limits.
What is the cost of an EoR setup?
Total employer cost combines gross salary, employer social contributions (~13-15%) and a management fee charged by the EoR (flat per month or % of payroll).
What is the difference between EoR and PEO?
A US PEO operates under a co-employment doctrine and is primarily a domestic HR-outsourcing model. An international EoR is the sole legal employer in the country of work and serves cross-border hiring.
Can an employee refuse an EoR arrangement?
Yes — like any employment contract, the worker must consent. The EoR contract should clearly state the legal employer, the applicable collective agreement and the operational direction.
Who is liable if there is a labour dispute?
The EoR, as legal employer, is the primary respondent to labour claims. The client may be co-liable in cases of disguised employment or operational misuse.