A self-employed person in Luxembourg is someone who carries out a professional activity in their own name. They may be craftsmen, shopkeepers, farmers or self-employed professionals (doctors, architects, consultants, etc.). Self-employed status entails specific responsibilities, particularly in terms of social security contributions.

How to start operating as a self-employed person?

To start your professional activity as a self-employed person it is not necessary to establish a company. However, it is necessary to join the joint social security centre (CCSS). This agency is responsible for managing social security contributions, which give entitlement to benefits such as old-age pension, disability pension and survivor's pension.

As a self-employed person, thanks to membership and contributions paid, you can enjoy different social benefits. You will be protected in case of maternity, incapacity for work and even receive family benefits, unemployment benefits and a pension. The joint social security centre takes care of affiliation with the national health fund. Finally, any change during activity must be declared directly to the joint social security centre.

How does the pension work in Luxembourg for the self-employed?

The self-employed are covered by the general pension insurance scheme in the same way as employees. This scheme provides retirement benefits, i.e. it covers :

• old age pension: pension granted when retirement begins, granted in principle from the age of 65, provided that you have contributed for at least 120 months.
• disability pension: replacement benefit granted under certain conditions, to a person who cannot normally meet their needs.
• survivor’s pension: pension which can be paid to the surviving spouse or parents/children under certain conditions.

What is the pension fund for the self-employed?

Self-employed workers are therefore covered by the sabe institution as salaried workers –CNAP: the national pension insurance fund.

How does CNAP calculate the pension of a self-employed person?

The amount of a self-employed person’s pension is calculated in the same way as employee pensions. The amount is calculated based on the number of years contributed and contributory income. You can request a calculation of the pension amount from CNAP from the age of 55.

Baloise also offers a calculation simulator for the pension amount.

From when can you claim your pension as a self-employed person?

The legal retirement age has been set at 65 years, conditional upon having contributed for at least 10 years.

It is also possible to take “early retirement”:

• from 57 years, conditional upon having contributed for at least 40 years (compulsory insurance periods)
• from 60 years, conditional upon having contributed for at least 40 years (all periods combined, conditional upon having contributed for at least 10 years of compulsory periods).

Any request can be made to CNAP from the age of 55.

Finally, you can continue your self-employed professional activity while receiving your pension without exceeding certain thresholds.

This involves building supplementary capital to have available upon retirement, an income in case of incapacity for work or even a death benefit. As retirement income falls, the Supplementary Pension Scheme for the Self-Employed (RCPI) has become an option not to be overlooked.

What is the RCPI (self-employed supplementary pension system)

The RCPI (self-employed supplementary pension system) is a supplementary pension system implemented in Luxembourg in 2019.

It allows the self-employed, liberal professionals and managers of SMEs to build a supplementary pension in a supervised and advantageous way.

What are the tax advantages of the RCPI?

The RCPI for the self-employed therefore offers numerous tax advantages:

• Premiums which are tax deductible as special expenses.
• A maximum deductible equal to 20% of your annual net income.
• The withholding of a flat rate tax of 20% and a remuneration tax of 0.9% on the premiums paid.
• A retirement benefit net of tax in Luxembourg. 

In order to benefit from this advantageous tax system, the self-employed person must be established in Luxembourg; that is, residing, undertaking their activity and making their tax declaration there.

Example tax deduction for subscribing to a payment in an RCPI:

The CCSS (Centre commun de la sécurité sociale) manages the affiliation of insured persons and the calculation and collection of social security contributions. Every self-employed person is affiliated to the CCSS. It assists self-employed workers with their supplementary pension arrangements. Its role is central to the administrative management and monitoring of contributions.
Since February 2024, the CCSS has provided self-employed workers with an online service at MyGuichet.lu, enabling them to track their supplementary pension and consult their acquired rights. This secure platform centralises all the essential information concerning their membership.