The Association pour la Vente Directe, AVD, estimates that between 2,000 and 3,000 Luxembourg residents are working in direct sales, i.e., selling products to a consumer in a non-retail setting, often in a person’s home through a demonstration to a group or going door to door.

While the sales method may be established in Luxembourg, there remain challenges—namely the fact that in Luxembourg there exists not single status for people doing this kind of work, AVD general secretary Daniel Thilmany said at a conference held in Luxembourg on 20 March.

“The Luxembourg State is losing millions of euros each year in VAT and taxes,” Thilmany said.

He explained that some consultants have set themselves up as self-employed, others have established retailers, for which they must prove a fixed sales location.

What is more, he says that social contributions are often disproportionate to earnings--a direct sales person who earns more than a third of the minimum wage pays the same contributions as if they were receiving the full minimum wage. These issues mean that most direct sellers working for foreign firms pay VAT abroad, pay no social contributions or taxes.

Following the French model would, Thilmany says, enable direct sellers to adopt a hybrid status, where they can be employed and self-employed, and where employers would be obliged to pay social contributions. 

He says that creating such a status would also increase consumer confidence by formalising the practice and ensuring sellers follow a code of ethics. It could also generate new jobs for jobseekers as it does in France through a convention with Pôle emploi.

There are up to 80 direct sales firms active in Luxembourg with a combined annual turnover of €30 to €40m, according to AVD.