What Taxes Do Self-Employed People Pay in Luxembourg?

As a self-employed person (indépendant) 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).

Your profit determines income tax and CCSS. Your turnover determines VAT obligations. These are two different numbers — don’t confuse them.

1. Income tax (impôt sur le revenu)

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 (déclaration d’impôt), with Form 110 annex for commercial/craft profit, or Form 152 annex for the receipts-minus-expenses method commonly used by liberal professions
• The tax office (Administration des contributions directes, ACD) may require quarterly advance payments (avances d’impôt) 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.

Practical tip: Keep track of all deductible business expenses (office, equipment, travel, professional subscriptions, CCSS contributions). Every euro of deductible expense reduces your taxable profit.

2. Social security (sécurité sociale, 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.

2026 change: The pension rate increased from 16% to 17% (self-employed share went from 16% to 17%; the state still pays 8.5%). This is new as of 1 January 2026.

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 (€2,771.33/month from 1 June 2026, after indexation)
• 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

Practical tip: Don’t wait for the tax assessment to adjust your CCSS contributions. If your income is much higher or lower than the estimate, contact CCSS proactively. This avoids a big surprise bill (or overpayment) later.

Going deeper on CCSS:

• How CCSS works in detail (contribution scenarios, MDE sick-leave coverage, calculation timing) — see CCSS for self-employed.
• Adjust your monthly payments to match real income — see how to adjust your CCSS monthly payments.
• Reduce your contributions (side activity, low income, exemption paths) — see how to reduce your CCSS contributions.

3. Municipal business tax (impôt commercial communal)

What: A local tax on commercial business profits, collected by your municipality (commune). 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).

Because of the €40,000 allowance, you only pay municipal business tax on profit above €40,000. If your annual commercial profit is under €40,000, you owe nothing.

4. VAT (TVA — taxe sur la valeur ajoutée)

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. Filing the initial VAT declaration with AED is mandatory in all cases within 15 days of starting your activity — even if your turnover stays under the franchise threshold. What depends on your turnover and your clients is the regime (franchise or normal) and whether you charge VAT and file periodic returns.

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

You can request the national franchise regime (régime de franchise) under article 57bis:

• No VAT charged on your invoices
• No periodic VAT returns — just a turnover declaration to AED before 1 March each year, stating the previous year’s turnover
• No right to deduct input VAT on your purchases
• Your invoices must include the exact mention: “TVA non applicable – Article 57bis de la loi modifiée du 12 février 1979” (in English: VAT not applicable under the SME franchise scheme, 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 franchise regime for the rest of that year only. For the following year, you lose the franchise and the normal VAT regime applies.

You can also opt out of the franchise and register for VAT normally, even below €50,000. Whether this makes sense depends mainly on two things: who your clients are (business clients can deduct VAT, individual clients cannot — so VAT raises the price for them) and how much input VAT you have to reclaim. Important: opting out commits you to the normal regime for at least one full calendar year, even if your turnover later drops below the threshold. The AED can release you earlier only if the conditions under which you carry out your activity change materially (article 57bis of the VAT law).

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

Filing frequency: annually if turnover under €112,000, quarterly if under €620,000, monthly if above. Deadlines: monthly/quarterly returns by the 15th of the following month; annual return by 1 May. If you file only an annual return (no periodic returns), the deadline is 1 March.

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.

The €10,000 threshold is EU-wide and combined (goods + digital services together) — not per country.

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.

If you do any business with EU partners (buying services, selling cross-border), the €50,000 domestic franchise does not cover intra-EU transactions. Cross-border B2B services trigger a VAT identification obligation from the first euro.

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.

Practical tip: Even if you’re under €50,000 and think you don’t need a VAT identification, the moment you start buying services from or selling to other EU countries, you likely need one. This catches many freelancers off guard.

Going deeper on VAT:

• Initial declaration with AED, regime choice (franchise vs normal), and the one-calendar-year lock-in for opting out — see our after-permit checklist.
• EU cross-border franchise and the €100,000 EU-wide rules — see EU VAT franchise for small business.
• Check your VAT number on VIES, or change your registered VAT address — see VIES check and how to change your VAT address.
• Cancel or correct an invoice with a credit note — see our credit notes guide.
• VAT on advance payments (cash basis vs accrual) — see VAT on advance payments.
• What to do when you receive a late purchase invoice — see late invoice guide.

Quick reference: commercial vs. liberal profession

Key amounts at a glance

The figures in force from 1 June 2026:

Building your own business is not easy — but it matters. We’re here to help you along the way.
💜💙 Your BravoLisa Team

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

Sources verified on 25 September 2026: Legilux — Loi modifiée du 4 décembre 1967 concernant l'impôt sur le revenu (LIR), ACD — Administration des contributions directes, CCSS — Assiette de cotisation et adaptation, Guichet LU — Impôt commercial communal, Guichet LU — Inscription à la TVA, CCSS — Paramètres sociaux, AAA — Système bonus-malus (présentation 2026, PDF), IGSS — Paramètres sociaux valables au 1er juin 2026 (PDF).