Luxembourg, a small country in the heart of Europe, stands out due to its strategic location and dynamic economy, which demands more workers than the resident population can supply. As a result, Luxembourg's labor market heavily relies on cross-border workers. These individuals live in neighboring countries, such as France, Belgium, or Germany, and commute daily across the border to work in Luxembourg. This applies to 47% of the country's 479,000 employees. Why do so many choose this option? What are the benefits of being a cross-border worker?
Which sectors employ cross-border workers?
Every day, 224,000 people cross the border to work in Luxembourg: 51,000 from Belgium, 52,000 from Germany, and 121,000 from France. They represent varying percentages across different sectors, mostly in private companies: 74% in domestic services (cleaning, home healthcare, etc.), 51% in Horesca (hospitality and catering). Cross-border workers also make up 33% of construction workers, 70% in manufacturing, 60% in trade and repair (notably in the automotive industry), 57% in administrative and support services (secretarial roles), 53% in information and communication, and 48% in scientific and technical sectors.
There are thus numerous opportunities in Luxembourg for residents of neighboring countries in a wide array of sectors, which explains the growing number of cross-border workers every year, despite the challenges this status may present.
Why become a cross-border worker?
Although Luxembourg offers a lot in terms of quality of life (financial benefits, abundant nature, efficient and rapid administrative systems...), the cost of living is also higher than in its neighboring countries, particularly due to real estate prices. These are extremely high: the average cost of purchasing an apartment in Luxembourg is €910,819, while buying a house averages €1,314,360. Renting a 50m² apartment costs around €1,500 per month, plus additional charges typically between €150 and €300.
Aside from these prohibitive costs, the conditions for securing housing (required documentation, half the agency fees paid by the tenant, a deposit of two months' rent…) make housing access particularly difficult, despite numerous government initiatives aimed at addressing the issue. Consequently, even many Luxembourgers are choosing to move to neighboring countries for better quality housing.
Advantages of being a cross-border worker
Living in France, Belgium or Germany while working in Luxembourg presents non-negligible benefits.
- Lower cost of living:
One of the main advantages for cross-border workers is the generally lower cost of living in border regions compared to Luxembourg. Whether in France, Belgium, or Germany, the prices of real estate, everyday goods, and services are often more affordable, allowing cross-border workers to retain more of their salary. Additionally, some consumer goods, such as gasoline and certain supermarket products, are cheaper in Luxembourg than in its neighboring countries. This allows individuals to optimize their spending by making purchases in two different countries, maximizing savings.
- Higher salaries:
Thanks to its particularly low employer contributions (typically around 14%) and its wage indexing system (where the minimum wage automatically increases with the cost of living), Luxembourg offers highly attractive salaries. The minimum wage for unqualified workers (€2,570.93 gross in August 2024) is higher than in Belgium (€2,070.48 gross in May 2024), Germany (€2,080 gross in January 2024), and France (€1,766.92 gross in January 2024). Additionally, the difference between gross and net pay is generally smaller in Luxembourg compared to other European countries, further widening the gap between Luxembourg's salaries and those of its neighbors. As a result, cross-border workers can enjoy a high salary while benefiting from a lower cost of living in their home country.
- More vacation days:
With its 26 legal vacation days and 11 public holidays, Luxembourg ranks among the top five European countries offering the most time off. While neighboring countries are not far behind on paper, with 35 total days off (including public holidays) in France and Germany and 30 in Belgium, Luxembourg has a significant advantage: if a public holiday falls on a Sunday or overlaps with another public holiday, an additional vacation day is automatically granted to all employees. This guarantees 37 paid vacation days every year, regardless of how the calendar falls. Being a cross-border worker means enjoying these extra vacation days.
- Access to high-quality services:
It may not be widely known but Luxembourg's healthcare system is among the best in Europe, with reimbursement rates ranging from 80% to 100% depending on the case. Cross-border workers, as Luxembourg employees, benefit from this healthcare coverage, which is especially valuable for those with children, as Luxembourg's social security covers 100% of healthcare costs for children up to 18 years old, including ophthalmology and orthodontics. Moreover, parents and future parents benefit from generous maternity and parental leave, as well as attractive family allowances.
In addition to healthcare, Luxembourg's administration is notably simple and efficient, and labor laws are straightforward, making it easier to understand and ensure rights are respected.
- Cultural and linguistic diversity:
Luxembourg is a multicultural country, home to many nationalities. Cross-border workers can enjoy this unique cultural diversity. Multilingual workers, common in Luxembourg, are highly valued in the job market, and working in an international environment broadens both professional and personal horizons. Luxembourg also encourages continued education, particularly language learning, with a generous policy on educational leave. The country offers a high-quality catalog of professional training at affordable prices, often available through evening courses. This promotes career advancement and retraining in a country that values experience and certifications over degrees.
Challenges of being a cross-border worker
No condition is perfect and that of a cross-border worker is no exception! Its many benefits are also met with inconveniences.
- Commuting time and traffic:
This is, without a doubt, the biggest downside to being a cross-border worker. Despite the Luxembourg government's efforts to improve traffic, rush hours (7 a.m. - 9 a.m. and 4 p.m. - 7 p.m.) can turn commuting into a nightmare. Traffic towards Germany may be less congested, but it's not uncommon to see long lines of stationary vehicles at the Belgian and French borders, morning and evening. Depending on where you live and your work schedule, commuting to work and back home can take several hours. On average, a cross-border worker spends an estimated two hours per day in their car. In addition to being physically and sometimes emotionally exhausting, this means leaving early every morning and returning home late, significantly reducing free time to spend with family or enjoy leisure activities. This negatively impacts work-life balance and can considerably reduce overall quality of life.
Regarding public transportation, many trains run daily between Luxembourg and major cities in neighboring countries. However, this requires living and working near train stations; otherwise, additional commute time is necessary. During peak hours, trains are often crowded, and it's not uncommon, especially on routes between France and Luxembourg, to have to stand for the journey.
- Complex taxation:
While Luxembourg's tax system tends to be simple, it can become a real headache for cross-border workers. Depending on the number of days actually spent working in Luxembourg, the country of taxation may change, as well as the country responsible for social security. Taxes and healthcare are not directly linked, meaning they don't change at the same time or according to the same criteria. This situation has been made even more complicated with the rise of teleworking.
Additionally, certain situations, such as having a spouse who is also a cross-border worker or, conversely, employed in the home country, can further complicate administrative processes or lead to additional taxes.
Where to live as a cross-border worker: Belgium, France, or Germany?
It's possible to live in any of these three countries and work easily in Luxembourg. When deciding where to live, it's helpful to research the tax systems of Belgium, France, and Germany to determine which is most beneficial for your situation. Proximity to the workplace is also crucial, as well as the languages spoken. For French speakers, it's often easier to settle in Belgium or France.
Here are the advantages and disadvantages of each country, along with the cities favored by cross-border workers:
France:
- Advantages: affordable housing, easy access to Luxembourg infrastructure, frequent trains.
- Disadvantages: often congested traffic, especially during rush hour, sometimes higher taxes depending on the situation.
- Border towns: Thionville, Metz, Longwy, Hettange-Grande, Villerupt, Audun-le-Tiche, Amnéville, Sierck-les-bains, Rodemack, Mont-Saint-Martin…
Belgium:
- Advantages: high quality of life, especially in the Luxembourg Belgian province, excellent healthcare system.
- Disadvantages: longer commute times for certain areas, rising property prices in border regions.
- Border towns: Arlon, Wolkrange, Hondelange, Messancy, Sterpenich, Aubange, Weyler, Udange, Battincourt, Selange…
Germany:
- Advantages: lower cost of living and property prices, fewer traffic jams.
- Disadvantages: greater distances depending on the region, potentially more complex taxes, German language proficiency required.
- Border towns: Nittel, Temmels, Tawern, Wellen, Oberbillig, Wasserliesch, Konz, Trier, Trierweiler, Sirzenich...
Administrative formalities for cross-border workers
For residents of Luxembourg's neighboring countries, becoming a cross-border worker is relatively simple: all it takes is finding a job in Luxembourg. However, for those who do not reside in France, Belgium, or Germany, and especially for non-EU citizens, matters get more complicated.
In such cases, you must follow the administrative procedures (visa, residence permit...) of the country you wish to settle in and then apply for a work permit in Luxembourg… This process can be very complex, especially if you do not speak the language of the country you are moving to.
Taxes, social security, unemployment, retirement… What to expect as a cross-border worker?
Cross-border workers are generally taxed in Luxembourg, which applies withholding tax, allowing employees to directly receive their salary without worrying about calculating taxes. While European regulations prevent double taxation, a cross-border worker's spouse may see their taxes increase in the home country to compensate for the uncollected taxes on the Luxembourg salary. Each situation is unique and may vary depending on the country of residence, so it's essential to seek information on the topic.
Cross-border workers can work remotely for up to 34 days per year. Beyond this limit, they will no longer be subject to Luxembourg's tax system and must declare and pay taxes in their country of residence. However, they will still benefit from Luxembourg's healthcare system as long as they work at least 49.9% of their total time in Luxembourg. If remote work exceeds this rate, the employee will no longer be covered by Luxembourg's social security but by that of their home country.
For retirement, contributions are deducted directly from wages in Luxembourg. When the time comes, retirement benefits for cross-border workers are calculated based on the different countries where they have worked. The application must be made in the country of residence, which will coordinate with Luxembourg to calculate the total pension allowance.
Finally, in the event of job loss in Luxembourg, cross-border workers must register with the employment agency in their country of residence: France Travail for France, a regional agency for Belgium, and Agentur für Arbeit in Germany. Unemployment benefits are then paid by the country of residence, based on agreements with Luxembourg. It is also possible to furthermore register with Adem (Luxembourg's National Employment Agency) to seek new job opportunities in Luxembourg.
Useful links:
5 Key Facts for Cross-border Workers
Taxation of Cross-border Workers
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