How to become self-employed in Luxembourg

Starting a sole proprietorship in Luxembourg is much easier than registering a full-fledged company as you will not need to draw up a memorandum of association, legalize your business with a notary and open an office. In this respect, self-employment as a form of entrepreneurship implies compliance with basic formalities before the state. However, on the other hand, individual entrepreneurs are more exposed to financial risks associated with running a business, for which they are personally liable. That is, for example, the entrepreneur is responsible directly and alone for debts.

The operations of sole traders, typically traders, artisans and craftsmen, are subject to the authority of one of the three chambers.

Chamber of Skilled Trades and Crafts

Chamber of Commerce

Chamber of Agriculture

Regarding self-employed intellectual workers, they are divided into three categories.

Freelancer status in Luxembourg explained

Luxembourg doesn't have an official "freelancer" status. Instead, it refers to individuals who work for clients based on contracts, similar to independent contractors. Here, being a sole proprietor and self-employed are essentially the same thing, and this structure is ideal for those who work entirely by themselves.

For loners only

If you ever plan to hire employees, you'll need to transition to a "SARL-s" (limited liability company) to accommodate your growing business.

Business licence

Obtaining a business license is a mandatory step regardless of the structure you choose. In order to get it for freelancers, a proof of qualifications to maintain named sole proprietorship is required.

Social security

Another key difference to consider is social security contributions. In Luxembourg, employers typically pay an additional tax on these contributions. Freelancers and sole proprietors, however, are responsible for covering these contributions themselves by registering with the Social Security Centre (CCSS).

"For sole proprietors, the standard income tax calculator applies, plus an additional 11.94%. This can be seen as an advantage of Luxembourg's tax system for freelancers," says our community. It's always best to consult with a professional to understand the full picture and determine the structure that best suits your specific situation and future plans.

All entrepreneurs who want to open a sole proprietorship in Luxembourg must obtain the necessary permits and accreditations to conduct business. In order to demonstrate access to a profession, the applicant will need to confirm their education, especially if it was obtained outside the country. The Ministry of Economy may require the applicant to recognize the documents of specialization in order to decide on further authorization for access to commercial activity.

Entrepreneurs whose activities are considered commercial, artisanal or intellectual, so mostly liberal professions yet requiring a commercial authorization must obtain a business permit.

Commercial activity

Commerce, hospitality and HoReCa (hotel, restaurant and café), transportation, manufacturing, etc.

Artisanal activity

Food industry, fashion, construction and engineering, audio-visual, entertaining and performing arts, etc.

Liberal intellectual activity

Accountants, architects, landscape designers, etc.

Requirements to obtaining a business permit in Luxembourg

Check yourself

If you meet the above criteria, you may be eligible for authorization to do business in Luxembourg.

*The mandatory items are marked with red asterisks.

Professional integrity

Proof that the business has been organized by a professional who works under his or her own name. The professional integrity is to guarantee the trustworthiness and to protect future partners and clients.

Professional qualification

That means that the entrepreneur has the required education to carry out the planned activity be it trade, craft or intellectual. CV and recognized diplomas confirm this.

Physical address in Luxembourg

A business permit is only issued if you have an address in Luxembourg where the sole proprietorship is registered. Presumably, all the necessary infrastructure required for the type of business is located at this address.

Self-managing a business

To ensure transparency, effective and continuous management by the permit holder is necessary. The presence of a third party, even if authorized to manage the business, is not sufficient to compensate for the non-participation of the owner.

Compliance with tax and business obligations

What this means is that you must not avoid taxes and that you must operate the business in a diligent manner, paying your bills on time and fulfilling your fixed obligations to your customers.

Check yourself

If you meet the above criteria, you may be eligible for authorization to do business in Luxembourg.

*The mandatory items are marked with red asterisks.

Where to apply for a permit

Entrepreneurs can apply for a business permit in several ways.

Online

This can be done online through MyGuichet.lu by using LuxTrust certificate. The system will define which supporting documents need to be attached to the application depending on the information provided by the applicant.

This method is advisable, because you can add all the missing items right away. Subsequently, it will be easier to register with CCSS, since the application will be automatically generated.

By post

For that, you need to send the application and accompanying documents to the General Directorate of Small and Medium Enterprises.

Applications are usually considered within 3 months of receiving a complete set of documents. If no response has been sent after the waiting period, you should contact the General Directorate of Small and Medium Enterprises to check the status of the application.

Cost of the permit

50 euros

is the stamp duty for the issuance of a business permit for the first time

0 euro

if the initial address of a sole proprietorship's registration changed

The application must be accompanied by proof of payment of stamp duty (droit de cachellerie) in one of the following formats

Excise stamp

Fee payment statement

The application for a business permit in Luxembourg will not be processed without proof of payment of stamp duty (droit de cachellerie).

What documents are required

The application document set depends on whether or not the applicant maintains Luxembourg residency and the duration of it — specifically whether it is more or less than 10 years, as well as the type of future activity for which the business permit is requested.

Commercial activity

Artisanal and any other activity

Individual cases when obtaining a permit

Generally, a business permit must be requested when you want to engage in professional activities as a sole proprietor or with a company operating under your name. However, this authorization may not be always necessary, and sometimes the procedure may vary. Here are some cases to look at.

A third-country national wishing to become self-employed in Luxembourg

Particular types of professionals

European companies providing services

Business owners need to inform the General Directorate for Small and Medium-Sized Enterprises within a month about any major changes, such as getting a travel package guarantee, opening or closing branches, changing the company's location, or if the business manager moves house. These updates can be sent either by mail or email.

Regarding the the withdrawal of a business license, this can happen under certain conditions. For example, if you do not inform the ministry of the change of principal residence of the director within a month, if you do not perform activities for more than two years, if you go bankrupt, if you lose professional reliability, and so on.

The Center commun de la sécurité sociale, or CCSS, is the Joint Social Security Center where the self-employed individuals in Luxembourg must register to enjoy social support. The social security system covers a wide range of risks such as illness, disability, death, old age, accidents at work and on the road.

Self-employed professionals must enroll in the social security system by submitting the declaration form within 8 days after commencing their activities.

What documents are required

To enroll in CCSS, you only need to submit a special form called Déclaration d'entrée - indépendants. You can do this in several ways.

Online in your personal account

If you applied for a business permit through MyGuichet, the application form will be generated automatically and you only need to submit it through your personal account.

Directly to CCSS

One can submit an application about entering self-employment in Luxembourg through the official website. In order to do so, download the document, complete it and submit it through contact page on the website. You can also use the same page to schedule an appointment and submit your documents in person, if necessary.

Centre commun de la sécurité sociale

4, rue Mercier, 2144, Luxembourg

(+352) 40 141-1

MON — FRI

8:00 – 16:00

TUE

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SAT — SUN

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Once you register as self-employed, you will be able to order your Social Security card online at the CCSS website.

A sole proprietor carrying out commercial activities in Luxembourg may set up a company to conduct business under the appropriate legal form (so-called sole proprietorship). Traders, as well as employees belonging to certain other professions, need to join the Register of Commerce and Companies - RCS (Registre de commerce et des sociétés). 

What documents are required

The documents necessary for registration with RCS are normally submitted online through the official website using a LuxTrust certificate. You should attach the following scanned documents to the application:

• Business owner's full name,
• Company's trade name and possible abbreviations and acronyms,
• Full business address where the operation is carried out,
• Objective of the business,
• Date of establishment of the business,
• Complete information about the managers and responsible persons, including their duties and personal status information,
• Business authorization reference number,
• Information on established contracts, transactions and terminations.

Any individual or legal entity that carries out economic activities autonomously and on a regular basis is considered to be a VAT taxable person. To register as a VAT payer, you must file a declaration with the Administration de l'enregistrement, des domaines et de la TVA, commonly known as the AED.

If a self-employed person is engaged in an activity that grants them taxpayer status, they must register as a VAT payer. Exemption from mandatory VAT registration is provided for those whose annual turnover is less than 35,000 euros. However they still need to file a declaration, which can be done remotely.

How to register

Open a bank account

Before registering with the AED, the self-employed person needs to open a bank account in a Luxembourg or foreign bank.

File a declaration and documents

The initial declaration (for mandatory registration) or optional declaration (for non-obligatory registration) can be filed online at MyGuichet.lu or by post through relevant forms.

A copy of the taxpayer's ID card and documents must be attached to the form.

Receive a unique number

After registration, a self-employed person will receive a VAT payer identification number that is a unique number with 8 digits preceded by the letters "LU".