Here's a practical guide to starting and managing a freelance business in Luxembourg, covering setup options, tax obligations, and financial management.

*Please be aware that we do not update this information in real time, so you should verify that the law has not changed recently.

1. Registering as a Freelancer in Luxembourg

Freelancing in Luxembourg typically involves registering as a sole proprietor, the simplest business structure. Here’s how to get started:

1. Identify Your Trade Chamber:

• Chamber of Skilled Trades and Crafts: For artisans and craftsmen.

• Chamber of Commerce: For manufacturing, trading, or general business activities.

• Chamber of Agriculture: For farming-related trades.

2. Depending on your profession (e.g., architect, doctor), you may also need specific permits and must adhere to industry regulations.

3. Social Security Registration:

• Register with the Joint Social Security Centre (CCSS) to access health and social benefits.

4. Choose and Register Your Business Name:

• Ensure the name is unique using the RCS Manager and register it with the RCS (Trade and Companies Register).

5. Visa Requirements:

• Citizens of EU countries, Switzerland, Norway, Iceland, or Liechtenstein do not need a visa.

• Citizens of other countries must secure a work visa before freelancing.

6. Tax and VAT Registration:

• Register to pay VAT and personal income tax through the Registration Duties, Estates, and VAT Authority.

2. Tax Obligations for Freelancers in Luxembourg

Freelancers in Luxembourg are responsible for several taxes:

• Personal Income Tax:

• Progressive tax rates range from 0% to 42%, depending on income level.

• An additional employment fund contribution (7–9%) is required.

• Property Tax:

• If you own real estate, you must pay 6% property tax plus a 1% transcription fee.

• Local Taxes:

• Varies by municipality and can be as high as 6.75%.

• VAT (Value Added Tax):

• Registration is mandatory if earnings exceed €35,000 annually.

• The standard VAT rate is 17%, with reduced rates (e.g., 8% for hairdressers or house cleaners).

• VAT returns must be filed monthly or quarterly, and VAT compliance requires detailed invoicing.

3. Accounting and Financial Oversight

Maintaining accurate financial records is essential for freelancers in Luxembourg:

• Invoicing:

• Include VAT registration number, seller and buyer details, VAT rate, and a unique invoice number.

• Retain invoices for several years for potential audits.

• Bookkeeping:

• Sole proprietors earning over €100,000 annually must maintain formal ledgers.

• Establishing a separate business bank account is recommended for transparency.

• VAT Reporting:

• Maintain clear records of VAT on goods and services. Ensure compliance with invoice requirements.

4. Steps to Start Freelancing in Luxembourg

To legally freelance in Luxembourg, follow these steps:

1. Apply for a work visa (if required).

2. Obtain necessary business permits (e.g., for restricted activities like healthcare or architecture).

3. Register with the Joint Social Security Centre (CCSS).

4. Verify and register your trade name with the RCS Manager and RCS.

5. Register for a VAT ID if your earnings exceed the threshold.

6. Open a business bank account.

7. Choose a tool or system for invoicing and financial management.