Question 1

How is freelance income taxed in Luxembourg?

Accepted Answer

Self-employed income in Luxembourg is taxed as personal income at progressive rates from 0% to 42%. Freelancers also pay social security contributions as both employer and employee, which totals around 25–27% of income — significantly higher than the employee share alone. The exact rate depends on your net profit and tax class.

Question 2

Do freelancers pay VAT in Luxembourg?

Accepted Answer

Yes, if annual turnover exceeds €35,000. Luxembourg VAT rates are 3%, 8%, 14%, and 17% depending on the type of goods or services. VAT collected is passed to the government and does not count as personal income.

Question 3

What is the difference between a freelancer and an employee net salary in Luxembourg?

Accepted Answer

Employees have their social contributions split between employer and employee. Freelancers pay both shares themselves, which means a higher gross-to-net gap. A freelancer earning €6,000/month gross will take home noticeably less than an employee on the same gross figure.

Question 4

How many billable days does a freelancer have in Luxembourg per year?

Accepted Answer

After subtracting public holidays (11 days) and typical vacation (26 days) from 52 working weeks at 5 days, a full-time freelancer has roughly 213 billable days per year (213 days × 8 hours = 1,704 hours). Actual availability depends on your working pattern and any sick days.

Question 5

What hourly rate do I need to match an employee salary in Luxembourg?

Accepted Answer

To match a €5,000/month employee net salary, you typically need to charge €45–55/hour at full-time hours — to cover both employer and employee social contributions plus income tax. Use the Freelance Rate Planner on this site to find your required rate.

Freelance Income Calculator