Have you been dreaming of living and working in beautiful Luxembourg? While you could immerse yourself in the daily grind of a 9-to-5 job, freelancing may be considerably more appealing. When you freelance in Luxembourg, you can enjoy full freedom with your career. From deciding which clients you want to work for to setting your pay rate, scheduling your own work hours and more, freelancing can dramatically improve your work-life situation.
Luxembourg is one of the smallest countries in Europe, but its population is rapidly growing. This means that there are great opportunities to serve clients in Luxembourg by putting your knowledge and talents to work. Before you can become a freelancer in Luxembourg, however, you need to be aware of a few important points.
How to Register to Work as a Freelancer in Luxembourg
You can open a business as a freelancer in Luxembourg with minimal hassle. In most cases, a freelancer will operate his or her business as a sole proprietor. This means that you and your legal entity are one and the same. The good news is that this is the easiest legal entity to start a business with in Luxembourg.
When you freelance in Luxembourg, your activities will fall within one of three chambers of commerce. These include the Chamber of Skilled Trades and Crafts for artisans and craftsmen, the Chamber of Commerce for manufacturing and trading activities and the Chamber of Agriculture for farming-related activities. If you are an intellectual worker, you may be required to obtain a business permit, obey specific laws and register to work. For example, an architect will need a business permit, and a doctor must follow related healthcare laws.
To register to work as a freelancer in Luxembourg, you must officially register with the Joint Social Security Centre. This enables you to obtain the health and social benefits available to the country’s residents. Then, you will select a business name. This may be your personal name or a specific trade name. You can ensure that the name that you select is unique through the RCS Manager. When you are ready, simply register your business name with the RCS.
If you are a citizen of another European country, Switzerland, Norway, Iceland or Liechtenstein, you will not need to obtain a special work visa. However, a visa is required for other countries. Before you start your new job as a freelancer in Luxembourg, you should register to pay VAT and personal income tax in this country.
What Are Your Obligations When Working as a Freelancer in Luxembourg?
When you open a business as a freelancer in Luxembourg, you will assume several specific financial responsibilities. For example, you will be required to prepare and file a personal income tax return. The personal income tax rate in this country is progressive. It ranges from zero to 42% depending on your income level. You must also pay into the employment fund when you work in Luxembourg. The contribution amount for the employment fund is between 7% and 9%. Filing your tax return in Luxembourg is easy to do. The process can be completed online through a simplified platform.
As a freelancer in Luxembourg, you must also pay property tax if you own real estate in this country. This rate is 6%, and a 1% transcription fee is added to it. There is also a local tax rate that may be as high as 6.75% in some areas of Luxembourg.
You are also responsible for VAT, or value-added tax. You must register to pay VAT through the Registration Duties, Estates and VAT Authority. Any person who expects to earn more than 35,000 euros must register. The standard VAT rate is 17%, but there are reduced rates as well as a flat exemption that are available for specific business activities. For example, you are only responsible for an 8% VAT if you are a hairdresser, operate a house cleaning service or participate in several other activities. VAT payments are required monthly or quarterly. In many cases, the VAT expense is passed on to consumers in the form of higher costs.
In Luxembourg, there is not a specific regulatory entity that is responsible for financial oversight. However, sole proprietors must maintain clear and accurate ledgers showing their income and expenses. Financial records must be kept at your official place of business and may be requested if your income is greater than 100,000 euros. Many sole proprietors will establish a separate business bank account to maintain transparency and to more clearly separate business and personal financial transactions. Keep in mind that there are requirements for recording VAT transactions, such as filing invoices showing VAT collections for each sale.
Best Way to Invoice Your Clients as a Freelancer in Luxembourg
When you freelance in Luxembourg, you must pay VAT on all applicable transactions. To document your compliance with this important requirement, you must prepare an invoice for each transaction. Invoices should be maintained in your files for at least a few years.
You are required to include specific information on each invoice. For example, you must show your VAT registration number, and each invoice should be sequentially and uniquely numbered. In addition, invoices should include the name and address of both the seller and the buyer. The VAT rate, the amount of VAT payable for the transaction and the reason for a reduced rate or exemption must be clearly written. To complete the invoice, you should include information about what good or service has been purchased and its cost
Preparing invoices can be time-consuming, and this task may keep your attention diverted from running your business and serving your customers or clients. You understandably need to streamline this important aspect of running your business. Some freelancers may use a generic template and manually fill out all of the details. Others, however, have discovered the excellent features of Xolo Leap. Through Xolo Leap, you will have your online EU company registered, have a virtual office, and be able to send out branded invoice while have all the finances organized in one single place. Starting an EU business of your own is never easier!
How to Launch a Business as a Freelancer in Luxembourg
The process of becoming a freelancer in Luxembourg is hassle-free. In fact, Luxembourg has less red tape for freelancers to cut through than many other European countries. However, you still must walk through a few important steps to work legally in this country. What are these steps?
- Obtain a work visa, if applicable.
- Obtain a business permit, if you plan to freelance in a restricted business activity.
- Register with the Joint Social Security Centre to have access to Luxembourg’s social services.
- Research your trade name through the RCS Manager to ensure that it is unique.
- Register your trade name through the RCS.
- Request a VAT ID number.
- Open a business bank account
- Determine how you plan to manage invoices and finances.
- Start looking for freelancing jobs.
Do you want to take advantage of Luxembourg’s great tax rates and lucrative market from another country? It is possible to set up and manage your business from anywhere in the world. Xolo Leap offers an easy-to-use e-Residency feature that can simplify this process for you. We will help you set up your fully-compliant Estonian one-person business which you can run from Luxembourg with the support of the product’s features and our professionals.
Become and Work as a Freelancer in Luxembourg
The business market in Luxembourg offers incredible opportunities to freelancers in a wide range of fields. With the market growing rapidly, you can expect your access to new opportunities to grow in the coming years. As a freelancer in Luxembourg, you can also enjoy the exciting benefits of being in complete control of your professional life. From deciding how to market your business to determining which days of the week you want to work and more, you are the decision-maker.
While freelancing in Luxembourg is filled with key advantages that you do not want to miss out on, there are some steps that you must take to set up your new business. Likewise, there are some responsibilities that require your attention for as long as you operate your business. These include paying VAT, preparing and keeping invoices, keeping up with required business permits that may be applicable to your trade and more.
Start Your Freelancing Business in Luxembourg Today
Now that you know what it takes to start and run a freelancing business in this country, you understandably may be eager to get started. With Xolo Leap, opening a business as a freelancer in Luxembourg and running it from anywhere in the whole world now become a fantastic reality!
