Gift vouchers in Luxembourg: rules, exemptions and best practices for employers

Offering a gift voucher to an employee is a common practice in Luxembourg. When properly framed, it can become a tax-efficient benefit, exempt from social security contributions and income tax. For employers, it is a powerful HR tool to reward, motivate and retain employees.

Highly appreciated in Luxembourg, gift vouchers have become a key employee benefit. They allow companies to mark important milestones while expressing tangible recognition: year-end holidays, birthdays, births, marriages or retirement. However, to benefit from tax exemption, these vouchers must comply with a specific framework defined by the administrative practice of the CCSS and the ACD.

In addition, long-service (jubilee) gifts benefit from a clear legal regime set out in Article 115-13 of the Luxembourg Income Tax Law (LIR).

Jubilee gifts: tax-exempt amounts provided by law

Article 115-13 of the LIR allows employers to grant gifts linked to an employee’s length of service without taxation, within the following limits:

• €2,250 for 25 years of service
• €3,400 for 40 years
• €4,500 for 50 years
• €1,120 for retirement after 35 years of service

An identical exemption of €1,120 also applies to company anniversaries (25th anniversary or any multiple of 25 years).

These amounts constitute net benefits, provided that the event genuinely corresponds to the qualifying jubilee.

🎁 Gift vouchers: taxable benefit in kind or exempt benefit ?

By default, a gift voucher granted to an employee is considered a benefit in kind subject to social security contributions and income tax.

However, an exemption may apply when the allocation complies with the criteria set out in the administrative tolerance rules (CCSS/ACD).

Eligibility for exemption: conditions to be met

The exemption is accepted only if all of the following conditions are met:

• The event is clearly identified and justified: Christmas, birthday, marriage, birth, retirement, etc.
• The value of the gift voucher is proportionate to the employee’s income and does not replace a bonus, incentive or 13th-month salary.
• The voucher is limited to specific goods or services and cannot be converted into cash.

If the exemption conditions are not met

The gift voucher is automatically treated as a benefit in kind:

• It is added to gross remuneration,
• It is subject to social security contributions,
• It is taxable like any other salary component.

Employers must therefore properly document each event, clearly define the conditions of use and keep supporting evidence in case of an audit.

Exemple

💡 New: the Up Luxembourg solution

At Up Luxembourg, we offer a gift budget solution designed to modernise employee benefit management while complying with exemption rules:

• 100% online, immediate and secure allocation;
• Digital delivery, ideal for distributed teams;
• Centralised HR tracking, with proof of allocation and full history.

Our digital solution also helps reduce errors, save time and enhance the employer’s modern brand image.

Benefits for employers

Using gift vouchers means:

✅ Rewarding employees

✅ Highlighting key professional or personal life events

✅ Strengthening engagement and retention

In summary

When used correctly, gift vouchers combine HR performance with tax optimisation. By complying with exemption rules, employers can motivate their teams while keeping social charges under control. Thanks to digital solutions such as those offered by Up Luxembourg, management becomes simple, fast and compliant.

FAQ – Gift vouchers and exemptions

Can gift vouchers be granted without a specific reason ?
Gift vouchers must be granted in connection with a clearly identifiable event (Christmas, birthday, marriage, etc.).

Is there an official exemption ceiling ?
There is no legal ceiling. However, we recommend granting a reasonable amount aligned with the employee’s situation.

What happens if the exemption rules are not respected ?
The gift voucher will be considered a benefit in kind and will therefore be subject to social security contributions and income tax.