Independent Worker Affiliation

In Luxembourg, the social security system relies on several autonomous public bodies, which provide coverage against work-related risks and group insured individuals by socio-professional groups.

The social protection system covers risks such as sickness, maternity, disability, death, old age, work-related accidents, and commuting accidents. Additionally, insured individuals may benefit from other services such as family benefits and unemployment benefits.

Independent workers must affiliate with the Common Social Security Center (CCSS), which handles data processing, affiliation registration, and collection of contributions for various funds. The CCSS serves as the point of contact for these insured individuals.

Furthermore, through the CCSS, insured individuals can voluntarily join the Employers' Mutual Aid Society to cope with potential loss of income due to illness.

Under certain conditions, family members can also benefit from health coverage as co-insured individuals.

Affected Persons

The following individuals must affiliate with social security as independent workers:

• - Individuals who carry out, on their own behalf (sole proprietorship), a professional activity falling within the jurisdiction of:
  • - The Chamber of Trades (craftsmen),
  • - The Chamber of Commerce (traders and industrialists), or
  • - The Chamber of Agriculture (farmers);
• - Independent intellectual workers, including:
  • - Liberal professions subject to establishment authorization (architects, engineers, chartered accountants, surveyors, industrial property advisors, economic advisors, etc.),
  • - Liberal professions subject to other laws (doctors, dentists, veterinarians, lawyers, auditors, pharmacists, etc.), and
  • - Other professions not subject to authorization.

Managers of commercial, craft, agricultural, or intellectual companies (holders of establishment authorization) who are either partners holding more than 25% of the shares in the case of a general partnership (SENC), a limited partnership (SECS), or a limited liability company (SARL), or members of the board of directors and delegated to daily management in the case of a joint-stock company (S.A.), a partnership limited by shares (SECA), or a cooperative are assimilated to independent workers.

Each of these individuals may, if they wish, voluntarily join the Employers' Mutual Aid Society.

Exemptions from affiliation apply to self-employed activities, whether principal or accessory, when the professional income does not exceed one-third of the minimum wage per year. However, these individuals may still affiliate voluntarily, provided they are residents of the Grand Duchy.

Preparatory Steps

A third-country national wishing to work and reside in Luxembourg as an independent worker must first apply for a residence permit for independent work.

Individuals intending to engage in a self-employed activity subject to establishment authorization must possess the required authorization. They affiliate with social security upon obtaining the establishment authorization from the CCSS.

Practical Procedures

Affiliation as an Independent Worker

The independent worker must affiliate with social security by submitting a declaration of entry for independent workers to the Common Social Security Center (CCSS). If they have applied for their establishment authorization online, they can use the automatically generated pre-filled form in their professional space.

Individuals assimilated to independent workers (partners-managers holding more than 25% of the shares or director-managers) must, although they will have independent status, affiliate using the declaration of entry form for employees rather than the form intended for independents.

An individual affiliated as an independent worker may hold both the positions of manager and employee in the same company.

In addition to affiliating with the CCSS, non-resident independents must also affiliate with the health insurance fund in their country of residence.

The independent worker (sole proprietor or employee) personally assumes the payment of social contributions (employee's and employer's share) proportionally to their gross professional income before taxes.

Adjustment of Contribution Base to Predicted Income

The social contributions of independent workers are provisionally calculated:

• - Either based on the last known net taxable income,
• - Or, for a new insured person, based on the minimum wage for an unskilled worker.

However, if the insured person can justify a different income, they can request an adjustment of their contribution base at any time by declaring their predicted income for the contribution year.

The CCSS sends a letter each year informing insured individuals of the income considered for calculating contributions and inviting them to adjust their contribution base if necessary.

When the net income for the relevant tax year is determined by the Directorate of Direct Contributions, the corresponding social contributions are recalculated to establish the final tax statement.

Side Occupation

If the independent worker engages in an ancillary activity, i.e., in addition to another main activity, social contributions are calculated based on one-third of the minimum wage.

However, if the independent worker declares a professional income lower than one-third of the minimum wage, they can request an exemption for insignificant income to be exempted from health, accident, and pension insurance.

Occasional Activity

If the independent worker carries out their activity occasionally and non-habitually for a predetermined period of less than 3 months per year, they can request an exemption for occasional activity to be exempted from health and pension insurance.

However, they must still contribute to accident insurance.

The occasional activity must be the only professional activity carried out by the individual.

This exemption does not apply to occasional and habitual activities (e.g., every Saturday for a total of less than 3 months per year).

Voluntary Membership in the Employers' Mutual Aid Society

Independent workers and their family members affiliated as helpers can voluntarily join the Employers' Mutual Aid Society to cope with potential financial burdens resulting from loss of income due to illness.

For independents already affiliated with social security, the request for voluntary membership of non-employees in the Employers' Mutual Aid Society must be submitted before January 1st of a given year, and the insurance takes effect from that date.

In the case of first affiliation or new affiliation after an interruption of at least 12 months, membership in the Mutual Aid Society begins at the start of affiliation with social security as an independent worker.

Voluntary insurance terminates upon written declaration by the insured and automatically in the event of non-payment of two successive contribution installments.

Coverage for Co-Insured Individuals

Dependent family members of the independent worker benefit from health insurance as co-insured individuals, provided they are not personally affiliated.

The terms of co-affiliation vary depending on whether the affiliate is a resident or non-resident.

When there are multiple main insured persons (e.g., a couple with children where both parents work), co-insured individuals are covered by the older principal insured person.

Sources: MyGuichet.lu