This document compares employment, self-employment, and personal services companies (PSCs) in Luxembourg. It outlines that nationals and those with valid work permits are eligible. Taxes and social security charges are paid in Luxembourg and potentially the UK for a PSC. Income is taxed differently based on employment versus self-employment. Social benefits like unemployment, health insurance, and pensions vary depending on time spent and earnings in Luxembourg. Retention rates for a PSC are highest at 75-80% of contract value.

1. Employment Self-employment
Personal Services
Company (PSC)
Eligibility All nationals
EU nationals or third
country nationals with a
valid work permit and a
base in Luxembourg
EU nationals
Taxes Luxembourg Luxembourg Luxembourg and UK
Social Security
Charges
Luxembourg employed
social charges:
Employer – 13.12%
Employee – 12.45%
Luxembourg self-
employed social security
of 25% unless you hold
a self-employed
A1/Certificate of
coverage under a social
security treaty.
Social security will be
paid in Luxembourg
unless an A1 is held.
The A1 may be from
where you are normally
resident or where your
employer is based.

2. Employment Self-employment
Personal Services
Company (PSC)
Income taxed on
Contract value less
employer and employee
social charges.
Contract value less
expenses and self-
employed social
charges.
Local salary (employer
and employee charges
are tax deductible).
Dividends are taxed
where the contractor is
tax resident at
withdrawal.
Social benefits
Unemployment
benefits, health
insurance and pensions,
depending on period of
stay and salary earned.
Health insurance and
pensions, depending on
period of stay and
earnings.
Unemployment
benefits, health
insurance and pensions,
depending on period of
stay and salary earned.
Maximum retention
possible at a rate of
Euros 500 per day for
a full calendar year.
Rates are different
for single/ married
individuals.
56-62% 61-68% 75-80%