Freelance in Luxembourg: jobs, documents, taxes

Legally speaking about freelancing in Luxembourg

In Luxembourg, freelancers can operate in two distinct ways: independently as sole proprietors or under a legally established company.

The first option, operating independently without any particular status, is highly advantageous as it significantly eases the initiation of freelance work. This is reflected in national statistics. According to the Global Entrepreneurship Monitor (GEM), entrepreneurial activity in Luxembourg has returned to pre-pandemic levels, both in absolute terms and relative to other European countries.

Top jobs for freelancing

Not all jobs can be performed independently, and some, even if possible, might not have much demand. So, which areas are the most suitable for freelancing? Let's give you a hand. Luxembourg is well-known for its significant financial sector, and positions such as Accounting, Bookkeeping, Financial Analysis & Modeling, and Business Analysis & Strategy are in high demand.

Beyond the financial sector, there are other fields with great demand that are particularly suitable for freelancers. The field of data science and analytics offers opportunities in professions like machine learning, data mining, and deep learning. In the area of IT, there are numerous options, such as full-stack development and front-end development. There is also a high demand in Sales and Marketing, especially in roles like Social Media Marketing and SEO.

If you want to know more about the most promising freelance professions, we recommend our dedicated article listing the most in-demand freelance jobs, as well as our article on remote work opportunities.

If you're ready to start working independently, keep in mind that while there is no need to acquire any special "freelancer" status, some administrative procedures are necessary. Continue reading to discover what these are and how to complete them.

Formalities to be fulfilled by freelancers in Luxembourg

Before receiving your first order, you must obtain several papers and register as self-employed with the authority responsible for it. While this is a necessity, it is not particularly difficult to do in Luxembourg.

1. Choose a Legal Form and Register Your Business

   As mentioned earlier, there is no official "freelancer" status in Luxembourg. If you choose to operate as an independent sole proprietor, no specific registration is required. However, if you opt to operate under a company, you must decide what type of company to establish (SA, SARL, SARL-S, etc.) and register it accordingly. For more information on this topic, refer to our article on How to Register a Company in Luxembourg.

2. Receive a Business Permit

   You might need a business permit, depending on various factors such as the sector or industry you plan to operate in, the product or service you will offer, and how and where you will offer your products or services. The government provides a list of certain activities that mandatorily require a permit. If you are unsure, the best option is to contact the House of Entrepreneurship or the Ministry of Economy. You can find more information on whether you need a permit and how to obtain it in our detailed commercial guide on How to Obtain a Business Permit.

3. Get a VAT Number

   This step is not always mandatory, as individuals whose annual turnover without taxes does not exceed 35,000 euros benefit from a VAT exemption. However, determining whether you need a VAT number can be complex since some cases may require it even if you are below this threshold, depending on the business operations. Moreover, applying VAT is advisable in some cases, such as when offering a B2B product or service, regardless of the expected turnover.

   To register for VAT, you must submit an initial declaration or a declaration of option with the Administration de l'enregistrement, des domaines et de la TVA, commonly known as the AED. This procedure can be completed online at MyGuichet.lu. More information is available on the government's website at guichet.public.lu.

4. Register with CCSS for Social Security

   Anyone working as an employee or self-employed person in Luxembourg must register with the Centre Commun de la Sécurité Sociale (CCSS). This registration covers the risk of sickness, maternity, disability, death, old-age, and occupational and commuting accidents. We will go deeper into this topic later in the article.

5. Pay Taxes

   Like employees, freelancers must also pay taxes. We will discuss this point in more detail in the final section of our article.

Social security for freelancers in Luxembourg

Self-employed persons in Luxembourg must register with Centre Commun de la Sécurité Sociale (CCSS) themselves and pay contributions according to their status. This department is also known as the Joint Center for Social Security. This department is responsible for managing the social security system in Luxembourg, including health insurance, pension insurance, and other social benefits. The CCSS is a public institution and is supervised by the Ministry of Social Security.

If you had to apply for an establishment authorization and did so through MyGuichet.lu, you can also register with the CCSS on MyGuichet.lu using the pre-filled form automatically generated in your professional space.

Taxation scheme for freelancers in Luxembourg

If you are already getting a headache, just think about the freelance tax in Luxembourg, we have good news for you, taxation for self-employed individuals in Luxembourg is relatively straightforward. Since there is no special "independent entrepreneur" status or separate legal entity for freelancers, all profits are classified and taxed as personal income.

This means that filing taxes is similar to the process for employees, greatly simplifying the initiation of independent activities. There are no additional forms, procedures, or extra taxes for freelancers. Freelancers must file a personal income tax return once a year and pay taxes accordingly. The tax amount is calculated based on the taxable class and gross taxable income using a progressive income tax system.

Freelancers who choose to operate under a company fall into a completely different category. In this case, there is both personal taxation and corporate taxation since the company constitutes a separate legal entity. Operating this way allows the company to deduct operating expenses before determining the taxable base. However, what can be deducted depends on the nature of the business.

Starting to work as a freelancer in Luxembourg is quite straightforward. Although the process might seem complicated initially, once you understand the legal requirements and the various procedures, you can begin freelancing in Luxembourg much faster than you might expect.

The Grand Duchy offers numerous advantages for independent workers. One of the main benefits is that there is no need for a special independent entrepreneur status, unlike in some neighboring countries, which greatly simplifies starting a new freelance activity. Additionally, the fact that taxes for freelancers are the same as for salaried employees makes the transition from a salaried position to freelance work relatively easy. There’s no need to learn new tax systems or pay additional taxes.

Overall, Luxembourg provides a supportive environment for freelancers, making it an attractive destination for those looking to establish themselves as independent professionals. With the right knowledge and preparation, you can take advantage of the opportunities available and build a successful freelancing career in Luxembourg.