Businesses established in the Swiss Confederation (CH) or in a country in the European Economic Area (EEA) can undertake occasional and temporary commercial, craft, industrial or liberal activities in Luxembourg without having a permanent establishment in the country.
In this case, they have to comply with certain formalities required by various authorities in Luxembourg as regards:
- the notification of services (craft or manufacturing business);
- VAT applicable to the services provided;
- the posting of staff;
- the taxation of profits.
Businesses established in Switzerland or in an EEA country benefit from the liberalisation of the provision of services based on the principle of the mutual recognition of qualifications.
Therefore, they can freely provide occasional and temporary services in Luxembourg.
On the other hand, businesses established outside the EEA or the Swiss Confederation must hold a business permit for all their occasional and temporary activities in Luxembourg.
Businesses who intend to provide services on a regular basis in Luxembourg have to set up a permanent establishment in Luxembourg and apply for a business permit.
Recognition of qualifications
Regulated activities in the Member State of origin - mutual recognition
If the profession is regulated in the Member State where the company is lawfully established, the qualifications required for the profession are mutually recognised.
Exceptions: in the case of activities which may have an impact on the safety or health of people, the authorities can require the provider to comply with the conditions of access to the profession in Luxembourg. The business operator must provide proof of a Master Craftsman's certificate (brevet de maîtrise) or equivalent to occasionally carry out one of the following craft activities in Luxembourg:
- heating-sanitary-refrigeration installer;
- lift, goods lift, escalator and handling equipment installer;
- or carpenter - roofer - tinsmith.
Unregulated activities in the Member State of origin - check of qualifications
If the profession is not regulated in the Member State of origin of the provider but regulated in Luxembourg, the Luxembourg authorities can verify the equivalence of professional qualifications by requesting:
- a professional experience of 2 years during the past 10 years in the Member State of origin;
- and a training certificate providing proof of the qualification to carry out said profession.
Activities that are occasional in nature
Whether there is an occasional and temporary nature of the activity is decided on a case by case basis which mainly depends on the duration of the activity, its frequency, periodicity and continuity.
If the activity is carried out beyond the scope of an occasional and temporary provision of services, businesses must have a fixed establishment in Luxembourg and apply for a business permit.
Commercial or self-employed activities - no notification
Businesses in the EEA or Switzerland who occasionally provide services falling under commercial or liberal professions that are subject to a business permit are exempt from administrative authorisation and prior notification by the Luxembourg authorities.
Craft or industrial activities - notification of occasional services
Businesses from the craft or industrial sector in the EEA or Switzerland must give advance notice of their occasional and temporary services in Luxembourg to the General Directorate for SMEs and Entrepreneurship.
VAT applicable to the provision of services
The VAT applicable to the provision of services depends on the type of customer and the type of service.
Since 1 January 2010, VAT is in principle payable:
- in the buyer's country of establishment in the case of the provision of services between taxable persons ('B2B');
- in the service provider's country of establishment in the case of the provision of services to end consumers ('B2C').
However, the VAT applicable to the provision of services contains exceptions to this rule, both for taxable and non-taxable persons.
Foreign businesses which carry out operations subject to Luxembourg VAT must register for VAT at the Land Registration and Estates Department (Administration de l’enregistrement et des domaines).
Taxation of business profits
Generally speaking, companies who provide occasional services in Luxembourg are subject to tax on profit in their country of establishment and not in Luxembourg.
However, in the case of a long term provision of services and pursuant to the double taxation agreement, the company is deemed to have a permanent establishment from a fiscal point of view. In this particular case, the foreign company must declare all profits made within the framework of the services provided to the Luxembourg Inland Revenue.
Posting of workers
A business established in the Swiss Confederation or in an EEA country can freely post its workers to Luxembourg within the framework of a provision of services, provided the workers (whatever their nationality) are duly authorised to work and stay in the country of establishment of the posting business.
In any case, the workers must belong to the permanent staff of the foreign business.
A business who posts workers to Luxembourg must, in particular:
- submit a notification of posted work and appoint a representative to the Inspectorate of Labour and Mines (Inspection du Travail et des Mines);
- provide proof, for the entrepreneur himself and for his employees, of:
- affiliation with the social security in their country of origin for the full duration of the posted work project (maximum 24 months);
- affiliation with the Luxembourg social security scheme in the event of posted work for a period of more than 24 months (except in the case of an extension of the posting);
- ensure the salaries of posted workers are subject to:
- income tax in the country where the business has its registered office if their stay in Luxembourg does not exceed 183 days;
- Luxembourg income tax if their stay exceeds a period of 183 days;
- respect Luxembourg labour laws, in particular with regard to the minimum wage and working times.
L-2449 - Luxembourg
Fax: (+352) 247-74701
Monday to Friday from 08.00 - 12.00
L-2361 - Strassen
Postal box: BP 27, L-2010
Fax: (+352) 247 96100
from Monday to Friday from 8.30 to 12.00 and 13.30 to 16.30