How to Register a Sole Proprietorship (Entreprise Individuelle / Indépendant) in Luxembourg

Luxembourg is a small country with a big reputation for stability, international business, and strong worker protections. For freelancers and small business owners, setting up as a sole proprietor—known locally as an “entreprise individuelle”—is one of the fastest and most flexible ways to get started. It allows you to work for yourself, invoice clients, and access the country’s full social security system without the heavy administrative burden of creating a company.

That said, independence comes with responsibilities. Most activities require a business permit, registration with authorities, and ongoing compliance with tax and social security rules. The paperwork can feel complex if you’re new to Luxembourg, and social contributions may come as a surprise compared to other countries.

Still, for many, the trade-off is worth it: lower startup costs, full control over your work, and the freedom to manage your business the way you want.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Luxembourg?

In Luxembourg, a sole proprietorship is officially called an entreprise individuelle or “indépendant(e)”.

Depending on context, it may also be referred to as:

• Sole trader
• Self-employed worker
• Independent contractor

These terms all describe the same business model: one person legally running a business without forming a company.

How does a sole proprietorship (entreprise individuelle / indépendant) work in Luxembourg?

Sole proprietorship vs. other business structures in Luxembourg

While an entreprise individuelle is the simplest way to operate independently, entrepreneurs may also choose to create a limited company. The most common option is a société à responsabilité limitée (SARL), which provides limited liability and is better suited for higher-risk or larger businesses. The table below shows the key differences.

Step-by-step guide: How to register a sole proprietorship in Luxembourg

Step 1: Check your eligibility

Eligibility depends on your residency status and activity. EU/EEA nationals can usually register freely. Non-EU nationals need a residence permit authorising self-employment. Certain professions are regulated and require proof of qualifications.

Step 2: Choose your business name

You may operate under your own name or a trade name. If you choose a trade name, it must be unique and registered with the RCS. Name availability can be checked online.

Step 3: Gather required documents

Commonly required documents include:

• Proof of identity (passport or national ID)
• Proof of residence or residence permit
• Evidence of qualifications for regulated professions
• Completed business permit application form via MyGuichet.lu

Step 4: Register with the relevant authority

Most self-employed people must apply for a business permit via MyGuichet.lu.

Step 5: Pay registration fees and contributions

A €50 stamp duty is payable when applying for a sole proprietorship.

Step 6: Complete post-registration obligations

Sole proprietors in Luxembourg are required to issue invoices for their services. Even if VAT registration is not mandatory because turnover stays below €50,000, invoices must still follow legal standards, including clear identification of the provider and client, description of services, and sequential numbering. A VAT number should also appear if applicable.

Beyond invoicing, sole proprietors must notify the Joint Social Security Centre (Centre commun de la sécurité sociale, CCSS) within 8 days of starting activity.

Financial and tax obligations for sole proprietors in Luxembourg

You are responsible for:

• Personal income tax: Sole proprietors are taxed under Luxembourg’s progressive personal income tax system, with rates ranging from 0% to 42% in 2025, depending on income brackets. Profits from the business are declared on your annual personal tax return with the Luxembourg Inland Revenue (Administration des contributions directes, ACD). Advance payments may be required during the year.

• VAT: The standard VAT rate is 17%, with reduced rates of 14%, 8%, and 3% for specific goods and services. VAT registration is mandatory if your annual turnover exceeds €50,000 under the SME exemption scheme. If you make cross-border sales within the EU, the €10,000 EU-wide threshold applies. VAT returns are usually filed quarterly or annually through the Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA, AED).

• Social security contributions: Sole proprietors must register with the Joint Social Security Centre (Centre commun de la sécurité sociale, CCSS) within 8 days of starting activity. Contributions cover health, pension, maternity, and dependency insurance, and are based on professional income. They usually amount to 20%–25% of net earnings, since the self-employed must pay both employer and employee shares. Minimum and maximum contribution bases apply, tied to the national minimum wage.

• Record-keeping: You must keep proper accounts, including invoices, receipts, and expense records. Documentation must be retained for at least 10 years in case of audit or verification by tax authorities.

• Invoicing: Invoices are mandatory for every transaction. They must include your name or trade name, address, sequential invoice number, date, client details, description of goods or services, and your VAT number (if applicable). Invoices must be stored for your records and presented to authorities if requested.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a sole proprietorship in Luxembourg?
None.

Do sole proprietors need to register for VAT?
Yes, if turnover exceeds €50,000/year.

How much are the standard monthly or annual contributions?

Contributions depend on professional income, since self-employed workers pay both the employer and employee shares. The combined rate is generally around 24% of net earnings, covering health, pension, dependency, and accident insurance. Minimum and maximum thresholds apply, as set by the CCSS. Income tax ranges between 0% and 42% based on income.

Can a sole proprietor hire employees?
Yes, but you must register as an employer and pay employer contributions.

How long does it take to register?
Business permit approval may take up to 3 months; other steps are faster.

Can foreign nationals register?
Yes. EU/EEA citizens can register easily. Non-EU nationals usually need a residence permit for self-employment.

Do sole proprietors need a separate business bank account?
Not legally required, but strongly recommended.

What happens if I stop working as a sole proprietor?
You must deregister with CCSS, cancel permits, and file final tax returns.

Are there any government incentives for new sole proprietors?
Some tax credits and reduced contributions may apply depending on income and activity.

Can I use Deel as a sole proprietor to get paid by international clients?
Yes. Deel supports freelancers worldwide with easy, transparent payments.

Does Deel generate compliant invoices?
Yes. Deel invoices meet Luxembourg’s legal requirements.

Can Deel help with taxes?
Yes. Deel provides downloadable reports and payment records for tax filing.

Does Deel offer contracts?
Yes. Deel offers locally compliant freelance contract templates.

Can I access benefits through Deel?
Yes. Deel offers access to perks like health insurance and retirement savings.