Self-employed or employee in Luxembourg: choosing the right framework

General information, accurate at the date shown: it does not replace legal, social-security or tax advice for your situation. Check the official sources quoted or ask a professional (lawyer, accountant).

The key test: subordination

Guichet.lu defines an employment contract as one in which a person undertakes to work for an employer, under whose authority they place themselves, in return for pay. This relationship of subordination is decisive: does the person receive orders and instructions, is their work supervised, are they part of your organisation (hours, place, equipment)?

If so, the relationship is in principle employment, whatever the contract is called. If the person organises their own work, uses their own methods and commits to a defined result or service, it is more likely a business-to-business service contract. When in doubt, take advice: the classification depends on the facts.

Working as a self-employed professional: the basics

1. The business permit

According to Guichet.lu, with some exceptions, anyone who wants to carry out a commercial or craft activity or certain liberal professions on a regular basis in Luxembourg needs a business permit (autorisation d’établissement) from the competent ministry. Conditions include professional integrity, qualifications for the professions that require them, an establishment in Luxembourg and effective management of the business. The legal framework is the amended law of 2 September 2011 (available on Legilux).

Examples from Guichet.lu: accountant and chartered accountant are liberal professions requiring a permit; economic consultancy now falls under the permit for commercial activities and services. Some professions (lawyers, doctors, auditors…) are governed by other laws.

2. Social security registration

The CCSS states that anyone working on their own account must declare their activity within 8 days. A registered self-employed person is in principle covered for sickness and maternity, accidents, pension and long-term care, and pays their own contributions. Guichet.lu adds that people whose non-salaried professional income does not exceed one third of the social minimum wage per year are exempt from registration, and that an exemption can be requested for an occasional activity of less than 3 months a year set in advance.

3. VAT

According to Guichet.lu, anyone who independently and regularly carries out an economic activity is in principle a taxable person for VAT and must register with the AED; for those not exempt from registration, this must be done within 15 days of starting the activity. The small-business exemption scheme is covered in our guide Invoicing as a freelancer in Luxembourg.

If the relationship is employment: the fixed-term contract

For a time-limited need, a company can use a fixed-term contract (CDD). Guichet.lu points out that it may only be used for a specific, non-permanent task, must be in writing (otherwise it is presumed to be open-ended), and may not in principle exceed 24 months including renewals, with at most two renewals. The cases where it may be used (replacing an absent employee, seasonal work, a temporary increase in activity, etc.) are listed in the law.

Warning signs

• the “freelancer” works only for you, full time, on your hours and under your management;
• they have no freedom over how the work is done;
• they fill a permanent position in your organisation chart;
• they have neither a business permit nor self-employed registration although the activity is regular.

In these situations, get advice (lawyer, accountant, professional chamber) before starting.

And on Askfreelance?

Askfreelance connects businesses with professionals, self-employed or salaried. We are neither an employer nor a temping agency, and the choice of framework is yours. To prepare the discussion, see also Writing a clear freelance brief.

Frequently asked questions

See also

• Invoicing as a freelancer in Luxembourg: mandatory details and VAT
• Cross-border workers and freelancers: working with Luxembourg from the Greater Region
• Part-time and freelance CFO in Luxembourg
• Freelance trainers and coaches in Luxembourg
• All guides