Luxembourg attracts many liberal professionals — lawyers, consultants, doctors, architects, engineers.
One of the first decisions when starting out concerns the practice structure: stay a sole trader, set up a civil company, or incorporate a commercial company? The answer depends on three factors:
- how strictly the profession is regulated;
- the level of personal risk accepted;
- the tax strategy pursued.
This article reviews the options and their consequences.
I. What a liberal profession is
A liberal profession is an independent activity based on an intellectual, technical or service offering. A distinction is drawn between:
- strictly regulated professions: medicine, law, architecture, accountancy;
- unregulated professions: consulting, coaching, translation.
By nature, these activities are classified as “non-commercial” unless otherwise provided. This classification has a direct bearing on the legal forms available.
II. The available forms of practice
Practising in one’s own name
This is the simplest form: the professional practises in their own name, with no minimum capital, no notarial deed and reduced formalities. The trade-off is a heavy one:
- unlimited liability on personal assets;
- income directly subject to the progressive income tax scale.
This option suits low-risk activities or modest beginnings, but is often set aside as soon as the stakes rise.
The civil company
Governed by the Civil Code, the civil company allows several professionals to practise an intellectual activity together while sharing their costs, without adopting a commercial form.
- Liability: unlimited but not joint and several — each partner answers only for their own share, unless otherwise agreed.
- Taxation: transparent — profits are taxed directly in the hands of the partners.
It is a coherent form for architecture or certain legal professions, but poorly suited as soon as a project requires outside capital or limited liability.
Commercial companies (SARL, SARL-S, SA)
Unregulated professions — consultants, engineers, coaches, IT specialists — may practise through a commercial company. Certain regulated professions, such as lawyers or chartered accountants, are also allowed to do so, subject to complying with the rules of their professional body.
The advantages are clear:
- liability limited to contributions;
- optimisation possible through corporate income tax;
- deductible remuneration for the manager;
- a stronger professional image with clients and banks.
Its drawback is administrative: articles of association, capital, a notary for certain forms and annual filing of accounts.
Note that Luxembourg has no equivalent of the French “SEL”: the professions concerned use the classic forms of the 1915 law.
III. A point of attention: health professions
Not all regulated professions can be practised through a company. Healthcare professions, in particular doctors and dentists, may in principle not incorporate a commercial company to practise their art.
They continue to practise in their own name, possibly grouping together within cost-sharing structures that have no legal personality.
As this framework may change, it is prudent to check the current law and the applicable professional rules before any grouping project.
IV. Legal and tax comparison
The choice of structure directly influences liability and taxation, as summarised in the following table.
| Form | Liability | Taxation of profits |
|---|---|---|
| Own name | Unlimited | Income tax (progressive scale) |
| Civil company | Unlimited, not joint | Transparent (taxed in the partners’ hands) |
| Commercial company (SARL, SA) | Limited to contributions | Corporate tax (≈ 23.9% in Luxembourg City) |
For professions whose income is high or irregular, or where one wishes to separate personal assets from professional risk, the commercial company quickly emerges as the most appropriate solution — always subject, of course, to the profession being permitted to use it.
V. Our approach at Ease Advisory
Before any choice, we proceed in three stages:
- Is the profession regulated? This point determines — sometimes strictly — the forms permitted.
- What is the risk exposure? It differs greatly between a consultant, an architect and a healthcare professional.
- Which tax strategy? As a sole trader, income falls under income tax; through a company, under corporate income tax, with more optimisation levers.
In practice, many professionals start as a sole proprietorship or an SARL-S, then move to a structured SARL as the business grows.
Conclusion
Luxembourg offers a flexible and modern framework for practising the liberal professions. The choice of structure is not a mere formality: it determines liability, taxation, appeal to clients and capacity to grow.
Decided properly from the outset, it protects personal assets, optimises taxation and immediately strengthens the professional image.
At Ease Advisory, we help you choose and set up the structure suited to your profession and your objectives. Unsure which form is most relevant? Let’s talk.
Need support on this topic? Discover our tax & compliance service in Luxembourg or get in touch with Ease Advisory.