The following overview unpacks the availability, registration requirements, and tax treatment of the sole proprietorship status—in Luxembourg officially known as the entreprise individuelle—as of 2025. This data-driven review covers the main regulatory, fiscal, and compliance elements relevant to international professionals evaluating individual business options in Luxembourg.
Sole Proprietorship in Luxembourg: Status and Access
The entreprise individuelle is the standard business structure for individuals operating on their own in Luxembourg. This status is accessible to residents without the need to form a separate legal entity. The framework supports a broad range of economic activities and remains the most widely used structure for freelancers, consultants, and small business owners in the country.
The sole proprietor operates under their own name, and all business activity, obligations, and profits are legally tied to the individual, not a distinct corporate entity. Importantly, the proprietor assumes full personal liability for the business’s debts and contractual duties.
Key Features of Entreprise Individuelle
| Feature | Description |
|---|---|
| Status Name | Entreprise individuelle (Sole proprietorship) |
| Availability | Yes – open to residents |
| Legal Entity | No separate legal entity; acts in the individual’s own name |
| Liability | Unlimited personal liability |
| Business Registration | Required with Registre de Commerce et des Sociétés (RCS); possible additional requirement with professional chambers based on activity |
| Separate Micro-Regime | Not available; standard sole proprietor status only |
Registration and Formalities
Setting up as an entreprise individuelle involves a mandatory registration with the Luxembourg Trade and Companies Register (RCS). In certain regulated professions or business activities, a parallel registration with the relevant professional chamber may be required. The absence of a separate micro-enterprise regime means that even the smallest businesses must complete the full registration process and comply with the standard tax and social security obligations.
Taxation for Sole Proprietors in Luxembourg (2025)
Taxation of an entreprise individuelle is closely integrated with the proprietor’s personal income tax. There is no option to pay a flat corporate tax rate; profits are taxed alongside other personal income using Luxembourg’s progressive tax schedule. For the 2025 tax year, the rates are as follows:
| Tax Base | Rate (EUR) | Rate (%) |
|---|---|---|
| Personal Income Tax (progressive) | – | 0% to 42% |
Note: There is no preferential or reduced rate regime for small businesses; taxation is at standard rates.
Profits from the business are included in the individual’s taxable income and are subject to the same progressive bands as salaried income. In addition, social security contributions are mandatory for all sole proprietors and are calculated on net business income.
Social Security Contributions
Contributions to Luxembourg’s social security system apply to all sole proprietors and cover health insurance, pension, and dependency insurance, among others. The rate and calculation base are determined by existing social security regulations and depend on the declared taxable income from the sole proprietorship.
Comparison: Luxembourg’s Individual Business Regime
Unlike some European countries, Luxembourg does not provide a simplified or micro-entrepreneur regime for one-person businesses. The entreprise individuelle represents the only available individual business status for those seeking to operate as a sole trader or freelancer.
| Country | Micro-Regime | Standard Sole Proprietorship |
|---|---|---|
| Luxembourg | Not available | Yes; Entreprise individuelle |
Pro Tips for Luxembourg Sole Proprietors
- Review personal liability implications: Since there is no separation between your personal and business assets, assess whether this risk is acceptable for your line of work before proceeding.
- Plan for personal taxation: Track all sources of income carefully to avoid unexpected tax liabilities when business profits are combined with other personal earnings at progressive rates.
- Complete all required registrations: Beyond RCS, double-check whether your business activity is regulated and if a chamber registration is necessary.
- Prepare for mandatory social security: Factor in social contributions from day one, as these are compulsory and can affect net effective income.
- Check official resources: Always consult Luxembourg’s government portals for up-to-date guidance on formalities and compliance. Visit guichet.public.lu or impotsdirects.public.lu.
Sources for Luxembourg Business Information
Luxembourg’s entreprise individuelle structure offers a straightforward path for individuals looking to do business in their personal capacity, but it comes with standard compliance responsibilities. The absence of a micro-entrepreneur regime means all profits are subject to personal income tax and social security contributions at the rates applicable to individuals, without preferential treatment. Registration with the Trade and Companies Register is mandatory, and liability is unlimited, so consideration of personal risk and thorough preparation are essential for anyone opting for this route.