The EU has set aside around €10 million in its budget for next year to continue paying a monthly housing allowance to its lowest-paid staff at several of the bloc’s bodies in Luxembourg.

The allowance, first agreed for up to four years as part of the deal for the 2025 EU budget signed last year, will continue to be paid throughout 2026 under the same criteria for employees at five EU bodies in Luxembourg – the commission, parliament, European Court of Auditors (ECA), European Court of Justice (ECJ) and European Public Prosecutor’s Office (EPPO).

The monthly housing allowance of up to €500 is aimed at helping the lowest-paid staff who live in Luxembourg deal with sky-high accommodation costs and improve the country’s attractiveness for EU civil servants.

A study published in June by the Global Property Guide, which compiles data from real estate platform atHome and statistics agency Statec, estimated the average monthly rent for a one-bedroom property in Luxembourg’s capital to be €1,700, compared to €1,100 in Brussels.

Those who are cross-border workers and who live outside the Grand Duchy are not entitled to the allowance, regardless of their salary. The cut-off for the payment is around the AD5 rank – the entry-level for an administrator, those earning a pre-tax salary of around €6,100 per month according to the latest salary grid, which was adopted by the European Commission during the summer.

The payment benefits only a small minority of the almost 15,000 EU employees in the Grand Duchy, although the exact number remains unclear.

As an estimate taking this year’s overall expenditure of €9.47 million across all EU bodies into account and based on an employee receiving the maximum amount of €500, it would mean just under 1,600 staff were impacted, just over 10% of the total. However, the real amount of impacted staff is likely to be higher as the payments are made on a sliding scale from €352 to €500.

Almost €9.5 million has been spent this year from the EU budget on the measure, according to figures compiled by the Luxembourg Times in response to a request for data from each of the participating bodies. Most EU bodies involved did not provide a specific breakdown of how many staff received the payment.

Participating employers

The European Commission, which was the largest participating EU body with over 3,600 staff in Luxembourg, paid out just under €3.6 million in 2025. It expects that amount to rise to €3.74 million next year, a spokesperson said.

The commission also confirmed that all staff at the main EU institutions – such as the parliament and the ECA – regardless of where they are based will receive a 3% pay rise in December, backdated to July this year, based on the implementation of a staff salary adjustment.

The European Parliament, with over 2,400 staff in Luxembourg, is estimated to have paid out a total of €2.88 million this year on the housing allowance, based on around 600 staff receiving an average of €400 per month.

There is expected to be a sharp rise in expenditure next year for the housing allowance payment for staff at the European Court of Justice (ECJ), which is forecasting a total bill of €2.6 million for next year, having paid out €2.1 million this year.

“Monthly amounts granted to eligible staff range from €352 to €500 according to five different payment scales, that will remain unchanged in 2026,” an ECJ spokesperson said.

€10 million bill expected in 2026

Staff at the EU’s budget watchdog, the ECA, which employs just under 1,000 people at its headquarters in the Grand Duchy, received a total of just over €623,000 in 2025. “We estimate the same amount for 2026,” an ECA spokesperson told the Luxembourg Times.

The fifth and final EU body at which the payment is applicable, EPPO, paid out €300,000 this year, but did not provide a forecast for 2026. EPPO, the bloc’s fraud-fighting agency which opened in 2021, is one of the smallest EU employers in Luxembourg with around 300 staff.

If the same number of staff at EPPO remain eligible for the payment in 2026, it would push the total bill for the housing allowance at EU bodies in Luxembourg to over €10 million next year.

Some EU staff, such as contract agents in the lowest pay bands, earn below Luxembourg’s monthly national minimum wage, with the rate for a full-time skilled worker standing at €3,244.48, and €2,703.74 for a so-called unskilled worker, the highest of any EU country.

Union views

The majority of EU staff unions in Luxembourg backed the proposal for a housing allowance payment when it was introduced last year, said Arty Kyramarios, the head of the Luxembourg branch of one staff union, the Union Syndicale Fédérale (USF).

Kyramarios described the payment as a “realistic option” which other EU countries could support from a budgetary point of view.

Another union representing EU staff in Luxembourg, the Union Syndicale Luxembourg, has previously rejected the idea of a housing allowance, describing the implementation of the correction coefficient as the solution to the issue.

Under the correction coefficient salaries are adjusted upwards to account for the increased cost of living compared to Brussels. This is the case for EU staff in many other cities, such as Dublin, but the EU does not currently apply the system to employees in the Grand Duchy.