Luxembourg attracts many liberal professionals — lawyers, consultants, doctors, architects, engineers. One of the first decisions when starting out concerns the structure of practice: remain a sole trader, create a civil company, or set up a commercial company? The answer depends on three factors: the degree of regulation of the profession, the level of personal risk accepted, and the intended tax strategy. 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-based provision. Some are strictly regulated — medicine, law, architecture, chartered accountancy — while others, such as consulting, coaching or translation, are unregulated. 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, without minimum capital or notarial deed, with reduced formalities. The trade-off is significant: unlimited liability over personal assets, and income directly subject to the progressive income-tax scale. This option suits low-risk activities or modest beginnings, but it 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 carry on an intellectual activity together while pooling their costs, without adopting a commercial form. The partners’ liability is unlimited but not joint: each is liable only for their share, unless otherwise stipulated. For tax purposes, it is 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 as a commercial company. Certain regulated professions, such as lawyers or chartered accountants, are also permitted to do so, subject to complying with the rules of their professional body. The commercial company limits liability to contributions, allows optimisation through corporate tax, makes the director’s remuneration deductible and strengthens the professional image with clients and banks. Its drawback is administrative: articles, capital, a notary for certain forms and annual filing of accounts. Note that Luxembourg has no equivalent of the French ‘SEL’ vehicles: authorised professions 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. Health professions, in particular doctors and dentists, cannot in principle set up a commercial company for the exercise of their profession and continue to practise in their own name, possibly grouping together within cost-sharing structures without legal personality. As this framework is liable to change, it is prudent to check the current state of the law and the applicable professional-body 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 first check whether the profession is regulated, as this point determines — sometimes strictly — the permitted forms. We then assess the exposure to risk, which is very different for a consultant, an architect or a health professional. Finally comes the tax strategy: in one’s own name, income falls under income tax; in a company, under corporate tax, with more optimisation levers. In practice, many professionals start as a sole trader or SARL-S, then move to a structured SARL as the activity 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 the capacity to grow. Decided well from the outset, it protects 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.