Doctor, lawyer, architect, consulting engineer: a liberal profession's accounting is not kept like a shop's. VAT, sole trader or company, social contributions and deductible expenses, made clear.
In short. A liberal profession is not kept like a shop. Two things decide your accounting: the form you practise in, sole trader or company, and your trade, because VAT changes with the profession. Medical and paramedical care is VAT-exempt; a lawyer, an architect or a consulting engineer charge it at the standard rate of 17%. At Advena, this accounting is kept in real time, on a fixed fee, from €325 per month.
Doctor, lawyer, architect, physiotherapist, consulting engineer: you run an independent intellectual activity, and your accounting questions are nothing like a trader's. You hold no stock, your revenue is made of fees, and depending on your profession you either charge VAT or are exempt from it. Here is what sets a liberal profession's accounting apart in Luxembourg, and the choices that weigh on what you pay.
What a liberal profession is, from an accounting angle
A liberal profession is an independent activity of an intellectual or technical nature, carried out under your own responsibility: health, law, architecture, engineering, expertise, consulting. The accounting particularity lies in its nature: your income is fees, your costs are mostly running and skill-related expenses, and the value you sell is your time. It looks simpler than a trade, and in principle it is, but two parameters complicate the picture: the form you practise in, and the VAT regime of your trade.
Sole trader or company: two different sets of books
This is the first choice, and it sets how your books are kept and how your income is taxed.
| Practising as a sole trader | Practising through a company | |
|---|---|---|
| Separation of assets | None: your assets and the activity's are merged | The company's assets are separate from yours |
| Taxation of profit | In your name, under personal income tax | At company level (CIT and municipal business tax), then on what you pay yourself |
| Accounting | Often lighter depending on size, centred on income and expenses | Double-entry under the PCN 2020 chart, with annual accounts filed |
| What drives the choice | Simplicity at the start, income directly available | Asset protection, optimising your pay, image |
There is no universal right answer. A young sole practitioner starting out often benefits from the simplicity of the sole-trader form; a practice that grows, hires and wants to protect its owner's assets moves to a company. Switching from one to the other is a moment where advice matters, because it touches accounting, tax and social protection at once. We set out a company's obligations in our article on corporate tax in Luxembourg, and the sole trader's case in our guide to an accountant for the self-employed and freelancers.
VAT depending on your profession
This is the most misunderstood point, because it does not depend on your revenue but on your trade. Not all liberal professions are treated the same.
| Profession | VAT treatment |
|---|---|
| Care to the person: doctor, dentist, physiotherapist, nurse, midwife | Exempt from VAT as care services |
| Lawyer, architect, consulting engineer, consultant, expert | VAT at the standard rate of 17% |
The exemption of health professions is not a benefit to claim: it applies automatically, and it comes with a trade-off. Because you charge no VAT, you also cannot recover the VAT you pay on your purchases and equipment; that VAT stays a cost. Conversely, a taxable liberal profession charges 17% to its clients but deducts the VAT on its expenses. A taxable profession with modest revenue may also fall under the exemption regime, which we explain in our article on the VAT exemption in Luxembourg. Confusing these regimes means either charging VAT you shouldn't, or forgetting to declare it.
Not sure whether your activity is exempt, taxable or eligible for the exemption? We settle it for your case, on a fixed fee.
Talk to us about your caseSocial contributions and pay
As a self-employed person, you are affiliated to the Joint Social Security Centre and you contribute on your professional income. Many liberal professionals underestimate this in the first year, because contributions are first calculated on a provisional basis, then adjusted once the real income is known. Books kept up to date let you anticipate that adjustment rather than suffer it. How you pay yourself then depends on your form of practice: as a sole trader, the profit is your income; through a company, you weigh a manager's salary against distributions, a choice with tax and social consequences that are better decided calmly.
A liberal professional's business expenses
The strength of a well-kept liberal practice is discipline on deductible expenses. Premises or a share of a home office, equipment, software, professional insurance, continuing training, professional body fees, travel: each of these reduces your taxable base if it is properly documented and tied to the activity. The classic mistake is mixing private and business expenses, or losing the receipts. Accounting kept as you go, with documents attached to each entry, turns that discipline into a reflex rather than a year-end chore, and it covers you in the event of an audit. The base of obligations that apply, whatever the profession, is described in our article on the accounting obligations of an SME in Luxembourg.
How we keep these books at Advena
We keep your books in the Odoo we set up for your VAT regime, exempt or taxable, and for the PCN 2020 chart if you practise through a company. Your fees, your expenses and your receipts live in one place, so your result and your contribution base read in real time, not the following spring. For a liberal profession, this continuous tracking changes two things above all: you anticipate the adjustment of your social contributions, and you know where you stand before deciding how to pay yourself. All of it fits within the fixed fee, from €325 per month, all included, with no hourly billing: a question is not charged as an extra. The detail is in our article on the cost of an accounting firm, and the wider picture in our guide to accounting firms in Luxembourg.
Who this model does not suit
Let's be straight. Our service is aimed at the liberal professional and the Luxembourg practice that want up-to-date books and a contact who knows their file. If all you want is to file a return once a year at the lowest price, never looking at your figures in between, our real-time approach will not help you. And if your situation involves a complex wealth arrangement or aggressive tax optimisation, that goes beyond bookkeeping: we inform and point you to the right specialist adviser, without ever claiming a regulated title we do not hold.
Want an accountant who knows the specifics of your profession and gives you your figures while they still matter? Let's talk.
Ask for your fixed feeFrequently asked questions
Does a liberal profession have to charge VAT in Luxembourg?
It depends on the trade. Care services from medical and paramedical professions are exempt from VAT. Other liberal professions, such as lawyers, architects, consulting engineers and consultants, charge VAT at the standard rate of 17%, subject to the exemption regime if their revenue stays under the national threshold.
Is it better to practise as a sole trader or through a company?
As a sole trader, the accounting is simpler and income directly available, but your assets are not protected. Through a company, assets are separate and pay can be optimised, at the cost of heavier accounting obligations. The right choice depends on your activity, your growth and your personal situation.
What accounting does a self-employed liberal professional need?
As a sole trader, often lighter accounting centred on income and expenses depending on the size of the activity. Through a company, double-entry accounting under the PCN 2020 chart, with annual accounts drawn up and filed. In both cases, up-to-date books let you anticipate contributions and taxes.
Are a liberal professional's social contributions deductible?
Mandatory personal social contributions reduce the self-employed person's taxable income. They are first calculated on a provisional basis by the Joint Social Security Centre, then adjusted once the real income is known, which is why up-to-date books help you anticipate.
Can you deduct business expenses in a liberal profession?
Yes: premises, equipment, software, professional insurance, training, professional body fees and travel reduce the taxable base if they are documented and tied to the activity. The rule is not to mix private and business expenses and to keep the receipts.
Further reading
- An accountant for the self-employed and freelancers in Luxembourg
- VAT exemption in Luxembourg: the €50,000 threshold
- Corporate tax in Luxembourg: CIT, municipal business tax and net wealth tax
- Accounting obligations of an SME in Luxembourg: the full list
- Accounting firm in Luxembourg: the complete guide for an SME
Why Advena?
We are the only Luxembourg accounting firm that keeps your books in the management tool it deployed at your practice itself, set up for your VAT regime. A fee stated up front from €325 per month, a named manager, your result and contribution base readable at all times, and no surprise invoices. We inform on the rule and keep the books; we point you to a specialist adviser when your situation calls for it, without claiming a regulated title we do not hold.
Information current as of 29 July 2026. The VAT treatment of liberal professions is detailed by the indirect tax portal. This article informs and does not replace an analysis of your situation.
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