Self-Employed Tax in Luxembourg: What You Pay and How Much

Self-employed tax in Luxembourg is above all income tax on your yearly profit, which the income tax law charges slice by slice from 0% to 42%, plus a surcharge on the tax. There is no separate self-employment tax: social security contributions and VAT come beside it, and a trader or craftsperson also pays the municipal business tax (ICC) on profit above €40,000 once those contributions are deducted.

Which taxes do you pay as a self-employed person?

You pay income tax on your profit and, if your activity is a trade or a craft, the municipal business tax (ICC); beside them come social security contributions on your income and, unless you use the franchise, VAT on your sales.

Luxembourg has no separate self-employment tax: the term names a US tax. Your social security here is paid as contributions to the CCSS (Centre commun de la sécurité sociale), beside income tax and on the same professional income.

Which of the four taxes and contributions reach you turns on two things: the kind of activity you carry on, which decides the ICC, and your turnover, which decides VAT.

Your profit decides your income tax, the ICC and your CCSS contributions; your turnover decides VAT. Profit is your receipts minus your expenses, turnover is your sales without VAT: two different numbers, never to be confused.

A sole trader pays no net wealth tax: the page on it of the tax administration, the ACD (Administration des contributions directes), puts it on companies, such as a private limited liability company (SARL), and notes that it was abolished for individuals on 1 January 2006; net wealth tax for the self-employed explains the rest. The guides on income tax and the other taxes you may owe are gathered under tax for the self-employed in Luxembourg.

How much income tax do you pay on your profit?

Your taxable income, which starts from your profit, is taxed slice by slice at 0% to 42%, and the tax carries a 7% surcharge, 9% on the tax on income above €150,000 in class 1 or 1a, so the top marginal rate is 45.78%.

The ACD’s income tax scale charges 0% in class 1 on the first €13,230 of taxable income and 42% only on the slice above €234,870, with rising rates in between. Each rate applies to its own slice, so you never pay 42% on everything.

Your tax class depends on your marital status, your children and your age under article 119 of the income tax law, as the ACD’s page on tax classes explains. Class 2 is spouses and partners taxed jointly and, for three years, a person widowed or, under conditions, divorced or separated. Class 1a is a widowed person, a person with a tax reduction for a child, or one who had completed their 64th year by the start of the tax year. Class 1 is everyone else, such as a single person under 64 without a child.

On top of the tax comes the solidarity surcharge, which the law calls the contribution to the employment fund (contribution au fonds pour l’emploi). The ACD’s page on it sets it at 7% of the tax, and at 9% beyond an adjusted taxable income of €150,000 in classes 1 and 1a, or €300,000 in class 2.

The surcharge’s 9% does not reach the whole tax: under the formula in the official tax scale on Legilux, it applies only to the tax on the part of your income above €150,000. The 42% slice starts far above that threshold, so it always carries the 9%: 42% × 1.09 gives the top marginal rate of 45.78%.

Taxable income is your profit after deductions such as your CCSS contributions, not the profit itself. Here is what the scale and the surcharge give in class 1, before any tax credit:

Two tax credits then lower the bill. For 2026, the ACD’s page on the credits for the self-employed gives the independent’s tax credit (CII) of €600 a year for a net profit from €11,266 to €40,000, and the CO2 tax credit (CI-CO2) of €216 a year from €936 to €40,000. The page adds that both shrink above €40,000 and end at €80,000, and that where your tax is too low to absorb them, the ACD pays them out to you when it sets your tax for the year.

Indemnities you receive as a volunteer for an association (ASBL) follow their own rules, set out in volunteer indemnities in Luxembourg.

How is a liberal profession taxed, compared with a trade or craft?

A sole trader in a liberal profession pays the same income tax as a trade or craft but no ICC, and enters the profit on Form 100, with Form 152 if they compare income and expenditure, instead of on Form 110.

The income tax law (LIR) knows three kinds of self-employed profit in article 10: commercial, agricultural and forestry, and liberal-profession profit. Commercial profit, under article 14, is the income of a commercial, industrial, mining or craft business, so a craftsperson is taxed exactly as a trader is.

Article 91 of the LIR makes a profit liberal when it comes from an independent scientific, artistic, literary, teaching or educational activity, or from professions such as doctor, lawyer, accountant, engineer, architect, expert adviser, journalist, interpreter or translator. It names neither IT nor management consulting, so the law’s text does not settle which side they fall on; IT consultants, commercial or liberal looks at the question.

A trader or craftsperson declares the profit on Form 110, which is both the statement of commercial profit and the ICC return, filed with Form 100. A liberal profession enters its profit on Form 100 itself, from a balance sheet and profit and loss account or by comparing income and expenditure; only in the second case does it attach Form 152, the list of operating expenses paid.

Liberal professions practised as a sole trader pay no ICC, Guichet.lu’s page on the municipal business tax states, but a capital company pays it whatever its activity: a liberal profession run through a SARL is not exempt.

Do you pay the municipal business tax (ICC)?

You pay the ICC if your profit from a trade or a craft, after your social security contributions, exceeds the €40,000 allowance: 3% of the excess times your commune’s multiplier of 225% to 350% in 2026, so 6.75% to 10.5%.

The ICC (impôt commercial communal) falls only on commercial, industrial, mining and craft businesses, the ACD’s page on calculating it states. It starts from the commercial profit worked out for income tax, with a few additions and deductions, Guichet.lu adds. The ACD’s page names the main deduction for a sole trader: your compulsory personal social security contributions, dependency insurance included, which come off the profit for the ICC only.

An allowance of €40,000 then comes off the adjusted profit, automatically, Guichet.lu says, and the ACD takes 3% of the rest as the base. Your commune multiplies that base by its own rate. In 2026 the ACD’s table of communal rates runs from 225%, in Luxembourg City and seven other communes, to 350% in fifteen, Differdange and Dudelange among them; 44 of the 100 communes apply 300%.

The ACD assesses and collects the ICC for the communes, from Form 110, which doubles as your ICC return. ICC advances fall due on 10 February, 10 May, 10 August and 10 November, the ACD’s page on advances sets out.

Example: €60,000 of profit in Luxembourg City

A sole trader in Luxembourg City makes €60,000 of commercial profit and, as an assumption, paid €9,000 of personal social security contributions in the year. The ICC base is €60,000 − €9,000 − €40,000 = €11,000, and the ICC is €11,000 × 3% × 225% = €742.50. With €49,000 of profit or less and the same contributions, the ICC would be zero.

What can you deduct from your profit?

Your operating expenses come off your receipts to give your profit; your compulsory CCSS health, accident and pension contributions come off later, as special expenses on Form 100, not as business expenses.

How the profit is worked out depends on your books. With regular accounts, a trader attaches the balance sheet and profit and loss account to Form 110, the form itself says; without them, the trader fills in its pages 3 and 4. A liberal profession that compares income and expenditure lists its operating expenses paid on Form 152. For a sole trader, the ICC itself is an operating expense, the ACD’s page on calculating it adds.

Your CCSS contributions are not among the operating expenses. Article 110 of the income tax law counts the contributions of the self-employed to compulsory sickness, accident and pension insurance as special expenses (dépenses spéciales), which article 109 defines as costs that are neither operating expenses nor costs of earning income. They come off your total net income on Form 100, not off the profit; dependency insurance is not on that list.

Other special expenses, such as loan interest and insurance premiums, have a floor beside your contributions: the ACD deducts a flat €480 a year for them on its own, under article 113, its page on special expenses says.

Keep the CCSS certificate of the contributions you paid in the year. Form 110 asks for your personal contributions as the certificate states them, for the ICC, and the compulsory health, accident and pension contributions go on Form 100 as special expenses.

How do you file and pay your tax, and what follows?

You file the year’s return by 31 December of the following year, with no extension possible, and pay income-tax advances on 10 March, 10 June, 10 September and 10 December; the ACD’s assessment then fixes your exact income.

The ACD’s answers for residents set the deadline: the income tax return (Form 100) and the ICC return for a year go in by 31 December of the next year, so 31 December 2026 for 2025, and no extension beyond 31 December is possible.

The ACD’s page on advances says an advance is in principle a quarter of the tax from your last tax assessment (bulletin d’impôt), the ACD’s decision fixing your tax for a year, and that the ACD can change it on a reasoned request or on its own initiative. In your first year, with no assessment yet, the ACD may set the advances on an estimate of your income, its answers for residents add.

After you file, the ACD issues the assessment. Only then is your exact income known, the CCSS’s page on the contribution base notes, and the CCSS recalculates that year’s contributions from it, so you pay a balance or receive a credit.

Keep your invoices: the AED (Administration de l’enregistrement, des domaines et de la TVA), which collects VAT, asks you in its list of a taxable person’s duties to keep copies of the invoices you issue, and every invoice you receive, for ten years from their date. BravoLisa keeps your books through the year and, on the Smart plan, prepares your returns from them, ready for you to review.

Missing a filing deadline costs money. The tax office can add a supplement of up to 10% of the tax, the ACD’s page on supplements and interest states, and the same page sets interest of 0.6% a month on tax or an advance not paid when due.

What do you pay the CCSS beside your tax?

Beside your tax you pay the CCSS about 25% of your professional income, up to about 28% with the optional Mutualité, on a base of at least the minimum wage, €2,771.33 a month, for a main activity.

You pay all your contributions yourself, the CCSS’s contribution base page says, and the CCSS’s notice to the self-employed sets the 2026 rates.

The base runs from the minimum wage, €2,771.33 a month since 1 June 2026 under the IGSS social parameters, to five times it, €13,856.63, for every branch but dependency, which has neither floor nor ceiling. The CCSS’s contribution base page adds that in your first year the CCSS bills you provisionally on the minimum wage. How the CCSS sets your contributions goes through each branch, and adjusting your provisional income brings the bill close to what you earn, which the CCSS urges as soon as you can estimate it.

A side activity beside a salaried job pays on its real income, with a third of the minimum wage, €923.78, as the floor, the CCSS’s affiliation page says. The same page adds that under a third of the minimum wage you can be exempted on request, but are then covered against no risk; reducing your CCSS contributions weighs that route.

When do you charge VAT?

You charge VAT at 17% unless your Luxembourg turnover stays at or below €50,000 a year and you asked for the franchise, or your activity is exempt, as a doctor’s care is. In every case but a fully exempt activity with no right to deduct, you declare the start of your activity to the AED within 15 days.

The AED’s page on national rates lists four VAT rates: 17% standard, 14% intermediate, 8% reduced and 3% super-reduced.

Trade, craft and liberal professions follow the same VAT rules. Under the VAT law, anyone who carries on an economic activity independently and habitually is a taxable person (article 4) and, if established in Luxembourg, declares the start of the activity to the AED (article 62), within the 15 days the grand-ducal regulation of 1 December 2009 sets, unless all your activity is exempt under article 44 of the VAT law without a right to deduct, as a doctor’s care is (article 2 of the same regulation).

Article 57bis of the VAT law exempts your sales under the franchise while your Luxembourg turnover, without VAT, stays at or below €50,000 a year. Under the same article you charge no VAT and deduct none on your purchases; you tell the AED your previous year’s turnover in writing before 1 March, and file no VAT return unless you supply a service whose VAT a business customer in another EU country owes, or owe VAT yourself, on a service bought from abroad for instance.

A franchise holder still declares the start of the activity and asks for the franchise in that declaration, the AED’s FAQ on the franchise says; what to do after your business permit takes you through it.

On the normal regime, the AED’s page on VAT returns sets how often you file from the previous year’s turnover:

Distance sales of goods and electronic services to consumers in other EU countries stay under Luxembourg VAT up to €10,000 a year across the EU, the two together (article 19quater); the cross-border VAT franchise covers what changes above it.

The franchise does not cover services to businesses abroad. A service to a business in another EU country is taxed where the customer is established (article 17), and supplying one obliges you to declare it and hold a VAT number from the first euro (article 62), franchise or not. Checking your customer’s VAT number on VIES comes first.

Once you charge VAT, the everyday cases have their own guides: correcting an invoice with a credit note, VAT on a deposit, changing your VAT address and a supplier’s invoice that arrives late.

Frequently asked questions

What taxes do self-employed people pay in Luxembourg?

Income tax on your profit, at 0% to 42% plus a surcharge of 7% or 9% on the tax, and the municipal business tax on a trade or a craft above a 40,000 EUR allowance. Beside them come CCSS contributions of about 25% of your income and VAT at 17%, unless you use the 50,000 EUR franchise.

Is there a self-employment tax in Luxembourg?

No. Self-employment tax is the name of a US tax, and Luxembourg has no separate one. Your social security is paid as CCSS contributions, about 25% of your professional income in 2026, or up to about 28% with the optional Mutualité des employeurs, beside income tax on your profit and, for a trade or a craft, the municipal business tax.

What is the self-employed tax rate in Luxembourg?

Income tax rises slice by slice from 0% to 42%, and the 42% applies only above 234,870 EUR of taxable income in class 1. A surcharge of 7% on the tax, 9% on the tax on income above 150,000 EUR, takes the top marginal rate to 45.78%. On 50,000 EUR of taxable income the tax is 7,854 EUR, about 15.7%.

How are liberal professions taxed in Luxembourg?

A liberal profession, such as a doctor, architect or translator, pays the same income tax as a trade or a craft, but as a sole trader no municipal business tax. It enters its profit on Form 100 and attaches Form 152 when it compares income and expenditure. Practised through a SARL, it pays the business tax.

Who pays the municipal business tax in Luxembourg?

Commercial, industrial, mining and craft businesses pay it, and so does a capital company such as a SARL, whatever its activity; a liberal profession practised as a sole trader does not. A sole trader pays 3% of the profit above a 40,000 EUR allowance, after social security contributions, times the commune's rate of 225% to 350% in 2026.

When do self-employed people pay income tax in Luxembourg?

In advances on 10 March, 10 June, 10 September and 10 December, each in principle a quarter of the tax from your last assessment; in your first year the ACD may base them on an estimate of your income. The return for a year is due by 31 December of the next year, and that deadline cannot be extended.