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How to combine salaried and self-employed activities in Luxembourg?



Do you want to become self-employed on a complementary basis alongside your salaried job?  (Photo : ING)

Do you want to become self-employed on a complementary basis alongside your salaried job?  (Photo : ING)

Do you want to become self-employed on a complementary basis alongside your salaried job? Why not? It is a good idea. You can do it to increase your income and purchasing power, monetize an activity that started as a simple personal hobby or test and grow your own business smoothly. Whatever your reasons, you have to pay attention to your project’s legal, tax and social consequences.

First of all, be careful before starting

You can combine multiple business activities as long as you respect your obligation of loyalty towards your employer. Make sure your current employment contract does not contain a clause of exclusivity and your complementary self-employed activity does not compete with your employer’s. Even if there is no exclusivity or non-competition clause, the best option is to discuss your project with your employer before starting your self-employed activity. Remember this old Russian proverb: “Do not cut the branch on which you sit.”

What about taxes?

As you might expect, you have to report the earnings from your complementary self-employed activity in your tax income return. If you have a self-employed activity in another EU Member State, you will be taxed in the country where your self-professional activity is conducted, even if it is not your residence country. For example, suppose that you live in Luxembourg and work as a self-employed professional in Germany. You will be taxed for your salaried activity in Luxembourg, but in Germany for your additional self-employed activity. Note that you must declare the total income received from all your activities to both tax authorities. The tax authorities of the country where you work as an employee will only tax you on the income generated by your salaried job, but will apply the tax rate in force based on your total income.  

How to proceed with social security?

As a self-employed person, you are eligible for social security. If you have a salaried and a complementary self-employed activity in Luxembourg, the procedure is quite simple. 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.

But what happens if all my business activities don’t take place in the same country? For which social security am I eligible? European legislation stipulates that you cannot be covered by the social security system of multiple countries at once. Therefore, if you combine a salaried job in one country with a complementary self-employed activity in another country, affiliation with the social security system and social security contributions for all your business activities will be subject to the country’s legislation of your salaried job. So, for example, if you are salaried in Luxembourg and self-employed in Germany, you have to pay your social contributions for all your business activities to the CCSS.

And if I have two salaried jobs in two different countries? It depends on the countries. If one of your salaried jobs is located in your residence country, you are covered by the social security of your residence country for all your professional activities (employed and self-employed), provided that you work at least 25% of your total professional time or receive 25% or more of your total income in that country. Otherwise, you are affiliated with the other country. For example, suppose that you are a resident in Luxembourg and work 33% of your time in Belgium, 33% in Luxembourg and 33% in the Netherlands. In this case, you have to register with the Luxembourg social security system. In contrast, if you are a resident in Luxembourg but less than 25% of your total income comes from Luxembourg and the rest from Belgium, you have to pay your social security contributions for all professional activities in Belgium. If you have two salaried jobs, both in another EU Member State outside your residence country, you are covered by the social security system of your residence country. For example, if you are a Luxembourg resident with one job in Germany and the other in France, you will be affiliated with the CCSS.      

Remember that you may be exempt from paying contributions for your complementary self-employed activity in Luxembourg if your earned income does not exceed one third of the annual minimum social wage[1].

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.