The Grand Duchy of Luxembourg is a viable choice for interested business investors. Despite being one of the smallest members of the European Union, Luxembourg has one of the highest GDP per capita in the world.
With over 600,000 residents, this country enjoys extremely high standards of living and low unemployment. Strategically positioned in the heart of Western Europe and surrounded by some of the strongest European economies, Luxembourg is the ideal destination for business owners looking to expand outside their jurisdiction.
Luxembourg’s economy predominantly relies on the service sector, which is one of the most developed in the world. However, that doesn’t mean that the country doesn’t have an equally-prosperous industrial side; abundant natural resources such as timber and iron ore are also present here.
Some of Luxembourg’s thriving sectors include freight shipping, satellite and transmission, steel production, and e-commerce. Biotechnology, health, and television broadcasting are also lucrative investment opportunities.
Luxembourg is a popular choice among foreign investors for many reasons. Some of them are the large financial sector, continuous economic growth, and excellent infrastructure that enables the export of local industrial products.
Forms Of Companies In Luxembourg
- S.A.R.L “Société à responsabilité limitée”—Private Limited Company
- S.A “Société anonyme”—Public Limited Liability Company
- S.C.S “Société en commandite simple”—Limited Partnership
- S.C.Sp “Société en Commandite Spéciale”—Special partnership
What is the difference between S.A.R.L and S.A companies in Luxembourg?
To register a S.A.R.L. company in Luxembourg, there has to be a minimum of 1 and a maximum 40 partners. The requirements for registration of S.A.R.L. are various, such as a diploma or proof of managing experience for the Manager of the company. Depending on the activity of the company, permits or certificates must be obtained. CompyCo will determine required steps for each client depending on your business’s activities. Lastly, we will register the company with the tax authorities and apply for a VAT number if needed.
The minimum deposit required to set up an S.A. in Luxembourg is 31 000 EUR, all of which must be paid upfront. S.A has to have a minimum of 1 director if there is 1 shareholder. If there are more shareholders, there has to be a board of 3 directors. One of these will be the Elected Chief Executive of the company.
Fundamentals Of A Limited Liability Company
Corporate Tax in Luxembourg
VAT in Luxembourg
Fundamentals of limited liability companies in Luxembourg
|Limited liability company||SARL|
|Minimum Share capital||12500 EUR|
|Registered office required||Yes|
|Physical office required||No|
|Min. number of Shareholders||1 called partner|
|Min. number of Directors||1|
|Local Director required||No|
|Other requirements||Trade license|
|Bank signatory must travel||In some cases|
|Timescale for company formation||30 days|
|Timescale for bank account opening||14 day|
|Timescale for obtaining VAT number||7 days|
|Statutory audit requirements||Yes|
|Shelf companies available||No|
How can I set up my company in Luxembourg?
Luxembourg is often considered an ideal location for foreign company owners. This is owing to its strategic closeness to lucrative European markets. CompyCo’s experts make the process of setting up your company easier by acting as your point of contact and seamlessly establishing your business in Luxembourg.
The entire process of setting up your company in Luxembourg takes about 4 weeks to complete.
The first step is selecting the company’s name and ensuring it’s approved by the relevant authorities.
Before drafting the Memorandum and Articles of Association, certain documents need to be collected. CompyCo’s experts will advise you on this and request the required documents depending on the residency of the shareholders and directors. Your previous business experience or business’s activities may also determine which documents you need to submit to start the registration process.
The Memorandum and Articles of Association must be notarized in Luxembourg. You also need to open a bank account in the country to pay the share capital.
When all these steps are complete, CompyCo will continue on and register your company with the Trade Register. Depending on your intended business activities, we’ll obtain the necessary licenses and ensure that that everything is legally-compliant for you to begin your business in Luxembourg promptly.
Setting up a company outside your jurisdiction can be daunting, especially when you’re unfamiliar with the new country’s laws and regulations.
Company formation in Luxembourg is a straightforward process for foreign and national investors alike. With the help of company formation agents who’ll simplify the process, you won’t have to worry about the hassle of ensuring you make the most of your investment. We’ve got local affiliates in every field in Luxembourg, ensuring your company’s registration is in the hands of experienced professionals.
Serving as your singular point of contact, we oversee the entire process and enable a steady flow of feedback and information between you and the local incorporation agents. You don’t have to worry about directly dealing with different experts in the financial, HR, and legal sectors, CompyCo’s network of experts will take care of that for you!
Bank Account Opening
With one of the highest rate of international banks in Europe, Luxembourg’s sophisticated banking sector powers the businesses in the country. Of the 144 international and local banks in the country, you have plenty of choice when deciding who to partner with on your business venture.
One of the initial steps of setting up a new company in Luxembourg is opening a bank account with your preferred bank. Since the share capital needs to be deposited before you can begin registering your company, a corporate bank account is essential.
As one of Europe’s most important financial centers, Luxembourg’s efficient banking system makes it incredibly easy to set up a bank account. With an extensive network of professionals in the financial sector and relationships with many of the country’s leading banks, CompyCo can connect you with a bank that’s most likely to open your corporate account. One of the most important factors that your approval depends on is the nature of your business activity; our experts will gain insight from you and guide you on the banks that will work best for your needs.
After depositing the share capital, the bank will issue a blocking certificate that gives the green signal for the incorporation process to continue.
Learn more about opening a bank account here.
Accounting & Taxation
The accounting and taxation obligations to take into consideration are:
- The tax year is the calendar year in Luxembourg
- Trading profits, sale of assets more than their original cost, and investments are all considered taxable profits
- Every business has to maintain their accounting books
- In Luxembourg, the corporate tax rate is 25%
- The current VAT rate is 17% on most goods and services. Exceptions apply depending on the type of products or service
- Luxembourgish companies are issued VAT numbers with the format of the country code LU followed by a 9-digit number
How can you employ staff in Luxembourg?
Hiring the right employees for your new business venture is an important step to ensure business success. After your company registration with the Trade Register is complete, you can hire according to Luxembourg’s local legislation.
Before you can begin tapping into Luxembourg’s diverse and dynamic workforce, you’ll need to register for pension benefits, social security, and work insurance. This can be tricky in a country outside your jurisdiction, especially when you can’t frequently travel back and forth. CompyCo oversees all your employment needs so you can set up your company remotely when possible.
From employment contracts to work permits for non-EU citizens, we have vast, in-depth knowledge of Luxembourg’s labor market and will help you navigate it through our full-service solutions.
Luxembourg’s multi-lingual, highly-skilled, and well-educated workforce can be hired as soon as your business is up and running.
If you need one employee to work from home for your company, we can help you avoid local company registration. Our custom solutions depend on your unique needs and can cover employment agreements, recruitment, and payroll services. CompyCo’s dedication to excellence ensures we’re always on the lookout for cost-effective solutions.
Have any questions? Take a look at our HR services page for more information about our International HR services!