The advantages of being self-employed in Luxembourg

Make a list of benefits of being self-employed in Luxembourg rather than in another European country is obviously very subjective! But we can make a non-exhaustive list.

You must first know that thanks to the freedom to provide services, under certain conditions, you can conduct your business from Luxembourg to all over Europe.

Second, contrary to what is said in the press, Luxembourg is certainly not a tax haven. From a tax point of view, the tax scales are very close to those in France or Belgium. However, there are some interesting provisions!

Contrary to what one might think the main advantages for the self-employed located in Luxembourg are not fiscal but social. Indeed, the social contribution rates are often lower than in other countries. Thus, social contributions are equivalent to about 26-27% of taxable income (against 48.07% in Belgium).

On the other hand, and contrary to many other countries, social the social cover of the self-employed Luxembourg is very close the employee’s one:

  • If he is unable to work due to illness, the self-employed, if he voluntarily contributes to the Employers’ mutual insurance scheme, is entitled to a daily cash benefit equal to 80% of its contributory base applicable at the time of occurrence of the incapacity for work.
  • The self-employed, if he stops his work for financial reasons, is entitled, under certain conditions, to unemployment benefits.
  • Social contributions are capped in Luxembourg. The contributory base cannot be higher than 5 times the minimum wage for unskilled or EUR 9.605 / month at 1 November 2014.
  • Dividends are not subject to social security contributions.

Tax returns, it is not too late!

The official date for the submission of tax returns for individuals is 31 March. However, if you do not have to file one, the administration accepts delivery of tax returns till 31 December.