What Taxes Do Self-Employed People Pay in Luxembourg?

As a self-employed person (independant / Selbststandiger) in Luxembourg, you deal with 3–4 main taxes and contributions:

The exact amount you pay depends on your profit (income minus expenses) and turnover (total revenue).

1. Income Tax (Impot sur le revenu / Einkommensteuer)

What: You pay income tax on your annual profit (revenue minus deductible expenses). Luxembourg uses progressive rates from 0% to 42%, plus a 7% solidarity surcharge on the tax itself (9% if income exceeds €150,000 in class 1/1a).

Who: All self-employed — both commercial and liberal professions.

How:

• Filed once per year via Form 100 (declaration d'impot / Steuererklarung) + Form 110 (commercial) or Form 152 (liberal profession)
• The tax office (Administration des Contributions Directes / ACD) may require quarterly advance payments (avances d'impot) based on your previous year's income
• Due date: 31 December of the year following the tax year

Calculation: Your profit is taxed progressively — you don't pay 42% on everything, only on the portion above the highest bracket. The effective rate for most self-employed people is significantly lower than the top marginal rate.

2. Social Security (Securite sociale / Sozialversicherung — CCSS)

What: Mandatory monthly contributions covering health insurance (assurance maladie), pension (assurance pension), accident insurance, dependency insurance (assurance dependance), and mutual insurance. As a self-employed person, you pay both the employer and employee shares yourself (except the state covers part of the pension).

Total rate (2026): approximately 25–28% of your professional income, depending on your mutual insurance class.

How it works in practice

• CCSS sends you a monthly invoice based on your last known income
• For your first year, contributions are calculated on the minimum wage (€2,703.74/month in 2026)
• Once your actual tax assessment comes through, CCSS recalculates — you either pay extra or get a refund
• You can (and should) adjust your provisional income with CCSS during the year if your actual income differs significantly

Minimum and maximum

3. Municipal Business Tax (Impot commercial communal / Gewerbesteuer)

What: A local tax on commercial business profits, collected by your municipality (commune / Gemeinde). The rate varies by commune.

Who: Only commercial activities (registered with the Chamber of Commerce). Liberal professions are exempt.

How it's calculated:

• Start with your business profit
• Deduct the €40,000 allowance (for sole traders / partnerships)
• Apply the municipal rate: national base rate (3%) x municipal multiplier (200%–400%)

Example: In Luxembourg City (2026), the multiplier is 225%, so the rate = 3% x 225% = 6.75%. Other communes have different multipliers — rates can range from about 6% to 12% depending on where your business is registered. Check with your commune for the current rate.

Filing: Integrated with your income tax return (Form 100). The tax office calculates it automatically. Advance payments are quarterly (February, May, August, November).

4. VAT (TVA — Taxe sur la Valeur Ajoutee / Mehrwertsteuer)

What: Value-added tax charged on your goods/services and remitted to the tax authority (AED — Administration de l'Enregistrement, des Domaines et de la TVA). Luxembourg's standard rate is 17% (lowest in the EU). Reduced rates of 14%, 8%, and 3% apply to certain goods and services.

Who: Both commercial and liberal professions — but whether you must register depends on your turnover and who your clients are.

Scenario A: Domestic only, turnover up to €50,000

You qualify for the SME exemption scheme (franchise TVA / Kleinunternehmerregelung):

• No VAT charged on your invoices
• No VAT returns (just an annual turnover declaration)
• No right to deduct input VAT on your purchases
• Your invoices must include: "TVA non applicable – article 57bis"

There is a 10% tolerance: if you exceed €50,000 but stay below €55,000 in the current year, you remain in the exemption regime for the rest of that year.

You can also voluntarily register for VAT even below €50,000 — useful if your clients are businesses (they can deduct the VAT) or if you have significant input VAT to reclaim.

Scenario B: Domestic turnover above €50,000

VAT registration is mandatory. You must:

• Charge VAT on your invoices
• File VAT returns (monthly, quarterly, or annually depending on turnover)
• You can now deduct input VAT on business purchases

Scenario C: You sell B2C to consumers in other EU countries

This covers distance sales of goods and digital/electronic services to private individuals in other EU countries.

• Cross-border B2C sales under €10,000/year — you can charge Luxembourg VAT (17%)
• Cross-border B2C sales over €10,000/year — you must charge the VAT rate of the customer's country

To avoid registering in every EU country separately, you can use the One-Stop Shop (OSS) — a single registration in Luxembourg that lets you file one quarterly return covering all EU countries.

Scenario D: You trade B2B with other EU countries

• Selling services to EU businesses: Generally VAT-free under the reverse-charge mechanism (autoliquidation) (your client self-assesses VAT). You need a valid VAT number.
• Buying services from EU businesses: You may need to self-assess Luxembourg VAT via reverse charge — this means you need a VAT registration, even if your domestic turnover is under €50,000.
• Buying goods from another EU country: VAT registration obligations may also apply.

Scenario E: You trade outside the EU

• Selling services to non-EU clients: Often not subject to Luxembourg VAT (place of supply is generally where the customer is). You may still need a VAT number.
• Importing goods from outside the EU: Subject to import VAT and potentially customs duties.

Quick Reference: Commercial vs. Liberal Profession

Key Amounts at a Glance (2026)

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This article is for general information purposes only and does not constitute professional tax, legal, or accounting advice. Every situation is different — consult a qualified professional (tax adviser, accountant, or lawyer) for advice specific to your circumstances. BravoLisa does not accept liability for decisions made based on this information.

Last updated: March 2026. Rates and thresholds may change — always verify with the relevant authorities for the most current figures.

Updated on: 08/04/2026