Written by Peter Harrison

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February 17, 2017

Self-employment in Luxembourg is dependent upon several factors. You must have a university degree which is recognised by the Luxembourgish Ministry of Higher Education and you must also have a recent police record, a notarised non-bankruptcy declaration and fixed address in Luxembourg where the work activity will be carried out. No work permits are needed for EU/EFTA nationals but you must obtain a Residence Certificate from the local communal registration within three days of arrival and also a business licence which is obtained from the Ministère des Classes Moyennes. You must also register for tax and social security and VAT is applicable.

TAX IN LUXEMBOURG
Income tax and related rates are progressive up to 40% and anyone known to be a resident in Luxembourg is obliged to pay. To be classed as a resident you need to be fiscally domiciled in the country for more than six months of the year and each tax year runs from 1st January until 31st December.

Tax returns are due by 31st March of the following tax year and the tax rate moves steadily from 0% for incomes of up to 11,265 EUR and 40% for incomes over 100,000 EUR. In terms of tax benefits self-employed workers in Luxembourg can claim a tax credit of 300EUR per year. Non-residents working in Luxembourg for less than 183 in any single financial year will only be liable for their Luxembourg income but if the stay is longer, the worldwide income will be taxed.

SOCIAL SECURITY IN LUXEMBOURG
Luxembourg has a high-quality standard of living and social security system. This is due to almost every working person paying into the system and self-employed contractors are obliged to make contributions for pension insurance at 16%, health insurance at 6.1% and dependency insurance at 1.4%. These percentages are calculated on taxable income with a yearly maximum contribution of 115,260 EUR.

For your first year of self-employment in Luxembourg a minimum amount of 461.77 EUR a month (based on 2016 calculations) but in future years you will be required to make up any shortfall to cover your full payment liability.