Employee Relocation Packages
What employers need to know
You have posted a job vacancy, you are struggling to find skilled and experienced candidates in Luxembourg or the neighbouring countries. You have received some interesting CVs, but the perfect candidate resides abroad. Should you discard them? No. This should not be discouraging for a company. The individual is willing to relocate, and you want to improve the odds that they will accept your offer. What you should do instead, is offer them a relocation package, as it can be difficult to move to a new country without any support.
A vital stage in converting a prospective international hire into a member of your staff is making sure all sponsorship, visa and legal working arrangements are organized prior to their relocation.
Relocate Me To LUX Takes Care Of The Individual's Relocation Process, so your new hire is more likely to accept the offer and does not feel overwhelmed by the confusing information they find online
What Is a Relocation Package?
A relocation package is a set of financial and logistical benefits provided by an employer to assist a new employee in moving to a new location for work. These packages aim to reduce the financial burden and stress associated with relocating. They can vary widely depending on the company and the job position. And even though they are optional benefits, they are nonetheless necessary if you are genuinely interested in expanding your search to include foreign candidates. Moving to a new country is expensive, and psychologically draining, supporting new employees during this process will help them start off on the right foot.
Relocation packages are not standardized in any way, so as a company, you will have to design your own assistance package, based on your company’s budget as well as your goals. However, no matter your limitations, it’s always a good idea to offer something, as it’s a great way to make your new team members feel welcomed and cared for, which in turn is good for the company’s culture, and work environment.
What to include in a relocation package?
When creating a relocation package, it’s important to address both the financial and logistical aspects of moving to ensure the transition is as smooth as possible for the employee. Here are key elements to include in a comprehensive relocation package.
Pre-Move Support
Visa sponsorship and paperwork: Getting a work permit is the first and most important step of moving to a new country, and there is usually a lot of paperwork involved. Providing the individual with the help of a relocation company for handling the paperwork will take a big burden off of your new employee.
House-Hunting Trip: Coverage for travel, accommodation, and meals for trips to the new location to find a housing solution.
Real Estate Assistance: Services to help sell the current home and find a new one, including real estate fees, home buying/selling support.
Moving Expenses
Professional Movers: Costs for hiring professional movers to pack, transport, and unpack belongings.
Packing Supplies: Reimbursement for boxes, tape, and other packing materials.
Storage: Temporary storage costs for household items if needed.
Travel Costs
Transportation: Airfare for at least the employee themselves, mileage reimbursement, or car rental for the move.
Lodging and Meals: Hotel stays and meals during the journey to the new location.
Accommodation
Short-Term Accommodation: Coverage for temporary housing (hotel, apartment) until permanent housing is secured.
Extended Stay: Options for longer-term temporary housing if the housing search takes more time.
-Covering real estate agent fees.
-Covering a rental deposit.
-Providing funding or reimbursement for a short-term rental.
-Providing information about housing options and the best ways to find an apartment.
Financial Assistance
Relocation Allowance: A lump-sum payment to cover miscellaneous moving expenses.
Family Support
Spousal Employment Assistance: Career counseling and job search support for the relocating spouse.
School Search Assistance: Help with finding schools and enrolling children.
Childcare Support: Assistance in locating childcare services.
Cultural Orientation: Training and resources for international relocations to help the family adjust to a new culture and language.
Settling-In Services
Integration Support / On-site assistance: A foreign employee’s transition to a new country does not end with their initial move.
- Language courses, if they don’t speak the local language.
- Advice or assistance with insurance, banking, and other financial needs.
- A free plane ticket to their home country for a vacation after a year of employment.
- Support for setting up utilities, driver’s licenses, and other essential services in the new location.
Tax Assistance
Tax Advice: Guidance on how the relocation benefits will impact the employee’s taxes.
Gross-Up Payments: Additional payments to cover the tax liability on relocation benefits.
Relocate me to LUX‘s purposes is to help individuals on your behalf. We can be your trusted partner for the relocation needs of your new hires.
how to pay out relocation packages?
Paying out relocation packages can be managed in several ways, depending on the company’s policies, the complexity of the relocation, and the preferences of the employee. Here are common methods for paying out relocation packages.
- Lump-sum payment
A one-time payment given to the employee to cover all moving-related expenses. With a fixed amount of money that they can spend as they see fit to arrange their move, whether that’s plane tickets, rental fees, or other costs. Many international job seekers say that this would be their preferred type of relocation package, as they can conduct their move in the way that suits them best without having to track every cost. - Reimbursement
In a reimbursement plan, you agree to pay your employee back for up to a predetermined amount for their moving expenses. They will be responsible for covering everything upfront, and then you will reimburse some or all the relocation related expenses of their move. This requires employees to have sufficient upfront funds, and it can be financially burdensome. - Direct payment to service providers
This option sees you paying relocation service providers, such as Relocate me to LUX, to manage the logistics of the relocation for you and your employee, rather than providing your new employee with the money upfront or reimbursing them after the relocation took place. We handle temporary or long term accommodation, transportation for the employee, their family and their belongings, and other logistic support during a move. This option can take a lot of the stress out of an international move. It can help make the relocation process easier for the employee, as they won’t have to deal with these costs at all.
Accepting a new position abroad is a big decision, and employees should not be left by themselves to deal with this. By providing clear information about what you will provide in your relocation package, you will be helping potential new foreign hires make the right choice.
Benefiting from the tax regime for highly skilled workers hired
Companies increasingly need to supplement their workforces with highly skilled workers in certain specific sectors. To attract specialists from abroad and encourage them to move to Luxembourg, employers often have to bear a significant percentage of moving, housing, travel, child-education, and other costs.
A specific tax regime exists for the costs incurred in moving highly qualified workers and borne by the employer. Under this special tax regime, these costs may be reported as operating expenses. A highly qualified worker who is hired by or posted to a company located in Luxembourg may, under certain circumstances and for a limited period of time, receive a full or partial tax exemption for the expenses in kind or in cash related directly to the move to Luxembourg.
Those considered to be highly skilled and qualified workers (also called impatriates) are workers:
- who usually work abroad and are posted by a business located abroad to carry out a salaried activity in a business incorporated in Luxembourg belonging to the same international group;
- who were directly recruited abroad:
- by a company legally established in Luxembourg; or
- by a company operating in Luxembourg but established in another member state of the European Economic Area in order to carry out a salaried activity in said company.
In order to take advantage of the tax regime for highly skilled and qualified expatriates, employees must be residents for tax purposes in Luxembourg.
This regime does not apply to employees hired under temporary contracts through temporary work agencies, or through labour leasing agreements.
General conditions applicable to highly skilled and qualified workers
Highly skilled and qualified workers must:
- make a significant economic contribution to or contribute to creating new high-value-added economic activities in Luxembourg;
- satisfy the conditions to qualify as a resident taxpayer;
- not have been domiciled in Luxembourg for tax purposes, or lived within 150 km of the border, or been subject to personal income tax in Luxembourg on professional income in the 5 tax years preceding the year of their entry into service in Luxembourg;
- have in-depth technical expertise, or at least 5 years’ specialist work experience in the sector for which the local company needs the employee, or the sector which the local company is planning to develop in Luxembourg.
Additional conditions applicable to workers in the case of intra-group postings
Highly skilled and qualified workers posted by a company located outside of Luxembourg and belonging to an international group must meet additional conditions:
- they must have worked for at least 5 years with the international group, or have at least 5 years’ specialist work experience in the sector in question;
- a working relationship must exist between the posting company and the employee during the period of posted work;
- the temporary assignment of the posted worker must provide for the right to return to the posting company at the end of the period of posted work;
- a contract relating to the posting of the worker must be concluded between the posting company and the local company in Luxembourg.
Additional conditions applicable to workers hired abroad
Highly skilled and qualified workers hired abroad must be highly specialised in a sector or profession for which there is a lack of suitably qualified candidates in Luxembourg.
Conditions applicable to Luxembourg companies
Only 30 % of the company’s workforce (full-time employees) may benefit from this regime. This requirement does not apply to companies that have been established in Luxembourg for less than 10 years.
Contractual conditions
The employee must:
- be employed for a job that is their main professional occupation;
- earn a fixed annual salary in Luxembourg of at least EUR 100,000 (gross amount before benefits in cash and in kind);
- use their specialised knowledge and know-how for the benefit of the company’s staff.
The employee cannot be brought in to replace other employees who are not within the scope of this tax regime.
Information extracted from Myguichet.lu – July 2024