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How does social security work if you want to be self-employed ?



According to the Luxembourgish social insurance code, you are a self-employed worker if you practise a professional activity on your behalf.  (Photo : ING Luxembourg)

According to the Luxembourgish social insurance code, you are a self-employed worker if you practise a professional activity on your behalf.  (Photo : ING Luxembourg)

You do not have to worry much about managing and paying social security when working as an employee. Your employer takes care of it for you. However, when you are self-employed, it is a different story. How do you register for social security? How are your social security contributions calculated? Do you benefit from the same coverage as an employee in the event of sick leave?

Before answering these questions, it is important to know who is considered a self-employed person in Luxembourg. According to the Luxembourgish social insurance code, you are a self-employed worker if you practise a professional activity on your behalf. This definition includes professional activities that fall within the scope of the Chamber of Trades, Chamber of Commerce or Chamber of Agriculture and professional activities of a predominantly intellectual and non-commercial nature: liberal professions subject to an establishment permit (e.g. architects, engineers, chartered accountants, surveyors, economic advisors), liberal professions subject to other laws (e.g. doctors, dentists, veterinarians, lawyers, auditors, pharmacists) and other disciplines not subject to authorization (e.g. artists, insurance brokers, sports trainers). Depending on the legal form of the business, may also be treated as self-employed managers that engage in a commercial, trading, agricultural or intellectual activity (and have obtained a business permit to do so), provided that they hold more than 25% of their company’s stock or are members of the board of directors and responsible for the day-to-day management.

How to get social security benefits?

You must register within eight days as self-employed with the Joint Social Security Centre (Centre Commun de la Sécurité Sociale or CCSS) by filling out the affiliation form. However, if you have founded a company to run your activities, you have to follow the affiliation formalities laid down for employees in the private sector. In this case, you must send an operating declaration the CCSS based on an application form or via MyGuichet.lu to obtain a special registration number, the employer’s identification number (matricule employeur). Then you must affiliate yourself as a new employee of your company by submitting a declaration of start of employment for a private sector employee (in French and German) or via SECUline (only in French). If you are a managing partner holding more than 25% of the company share or director, you must also use the same declaration, even though you have the self-employed status.

Is social security the same for employees and self-employed?

Like employees, you have a right to monetary benefits for parental leave, a pension, early retirement and even unemployment benefits provided that you meet relevant criteria (economic and financial difficulties, medical reasons, force majeure, actions of a third party). However, there is a difference between an employee and an independent status when it comes to coverage in the event of illness or physical disability. If you are a self-employed worker, you are covered if you pay into the Employers’ Mutual Insurance Scheme (Mutualité des Employeurs). This registration is neither compulsory nor automatic and has to be requested when registering for social security with CCSS. If you run your professional activity through your own company, your company is automatically affiliated to the Employers’ Mutual Insurance Scheme.

How are your social security contributions calculated?

Your social security contributions are provisionally determined on the basis of the last tax report issued by Luxembourg’s tax office (Administration des Contributions Directes or ACD). If you are a newly insured person, the CCSS will automatically set the social minimum wage for unskilled workers and wait to learn your real revenue before recalculating your social security payments. One piece of advice: as soon as you know what you really earned, communicate it to the CCSS in order to avoid recalculation with a much higher contribution a few months later. Every year, the CCSS sends you a letter that specifies the income used to calculate your social security contributions. However, you may, at any time, submit a request for adjustment of your taxable base to the CCSS with a declaration of your expected income for the year in which contributions are due. You can ask for an exemption from paying your social security contributions if your professional income does not exceed one third of the minimum social wage[1]. In this case, you will not be covered.

For more information, contact the House of Entrepreneurship (Chamber of Commerce) for commercial and industrial professions, Ydé (Chamber of Trades) for skilled craftspeople, the relevant professional association or the CCSS.

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[1] 2,256.95 € gross per month for unskilled workers and 2,708.35€ gross per month for skilled workers from 1 October 2021.