You are looking for help, advice or for contacts to develop your business or your own company in the Grand Duchy? We give you here the main information to help you in realising your project.
Why starting a business in Luxembourg?
Luxembourg is a dynamic and stable country that has many assets for the creation and ownership of a company. More than 200,000 cross-border commuters come to work in Luxembourg every day, compared to an active population of more than 430,000 employees. Luxembourg is a dynamic country with a diversified economy, in services, industry and high technology. It exports nearly 65% of its production of goods and services. Creative companies employ 8,000 people and generate €1 billion in revenues. Public funding for R&D has increased tenfold since 2000. The country is clearly in a third industrial revolution strategy with more than 220 recommendations and projects.
The country attracts many talents. It ranks 10th out of 125 countries in terms of competitiveness to attract, retain and develop its workforce. Luxembourg is home to 12 European institutions. More than 130 banks from 29 countries are located there and generate 28% of GDP. The country is connected by direct flights to more than 75 destinations.
In addition, the country is known for its economic, financial and political reliability. Only 8 Prime Ministers have succeeded each other since 1945. The social dialogue is constructive. Only 4.1 working days are lost on average per 1,000 workers, while the European average is more than 30 days.
In addition, corporate taxation is interesting with a nominal corporate tax rate of 24.94%. Low wage costs also make it possible to recruit qualified staff. Several recruitment aids are also available. Administrative formalities are also lighter compared to other countries.
Practicing your job as an independent
The first way of starting your business is to take an independent status, which is rather common in Luxembourg. It must be said that the self-employed worker benefits from social security coverage fairly close to that of the employee.
You will so practice your activity for yourself, without having to create of particular company and will practice with an establishment authorisation which you will beforehand have to demand in support of the necessary documentary evidences of the right to practice your job. See acknowledgment of diplomas and accreditation of professional knowledge.
You will also have to get a VAT number to be able to emit invoices with perception of the VAT. However, below a certain amount of turnover, it is possible to invoice excluding VAT.
The self-employed worker benefits from social security coverage fairly close to that of the employee. Unlike employees, however, the self-employed worker must pay his social security contributions. He/she will have to be be registered with the CCSS., which will allow him/her to contribute to the various insurances, including the old-age pension. He/she must also contribute to a specific accident insurance policy depending on the profession.
Self-employed people have the same rights as employees in terms of old-age pension, maternity and parental leave. In the event of incapacity for work, the benefits will be paid from the 4th month. In the event of unemployment, he/she will be compensated under certain conditions, including that he/she must have been working for at least 6 months.
The self-employed person is indefinitely liable for the debts and commitments linked to the activity on his personal assets.
From a tax point of view, a municipal commercial tax will be due on the operating profit and the entrepreneur will be taxed on his income as an individual.
Having a business in Luxembourg
Creating a trading company
The 2 most widespread forms of commercial companies in Luxembourg are the LLC (Limited Liability Companies) and the PLC (Public Limited Companies).
Limited Liability Company LLC – “Société à Responsabilité Limitée – SARL”
The Limited Liability Company (SàRL) requires a capital of 12,000 euros and at least 2 shareholders. The headquarters must be located in the Grand Duchy of Luxembourg, the director does not need to be a Luxembourg national. For the creation of your company, you will have to use the services of a notary to draw up the articles of association and carry out the administrative formalities for registration in the Trade and Companies Register (RCS). This form of company requires a certain formalism and the company is subject to a certain number of taxes, including a fixed registration fee, a commercial tax, a wealth tax, a tax on local authorities’ income and a VAT return. The advantage is that the company is fiscally “opaque”. The partners are not personally taxed and their liability is limited in relation to their personal assets.
In the case of a simplified limited liability company, constitution may be carried out under private deed. The capital will be comprised of 1 and 11,999 euros.
More information on guichet.lu.
Public Limited Company PLC – “Société Anonyme SA”
The Public Limited Company requires a capital of 30,000 euros. A single shareholder is sufficient. This form of company, if it is rather intended for large companies, could have been chosen by an SME because bearer shares can be sold more easily.
Find out more about guichet.lu.
The Luxembourg Soparfi
Financial Participation Companies (including SA, SARL,…) may opt for a SOPARFI tax regime provided they hold financial participations in other companies (subsidiaries) and manage them.
The interest of this company is the exemption from the taxes bound to the capital gains and to the dividends under certain conditions, while the applied basic tax is higher. Inquire with an accountant, with a solicitor or with a lawyer on the precise characteristics of this social structure.
Steps to follow to start a business
Many Chambers of Commerce, of all nationalities, are present in Luxembourg. They can advise you on creating a comany or being an entrepreneur in Luxembourg.
The guichet.lu website lists for you the main steps to be followed to create your company, either as a self-employed person or by developing your activity within a company.
Authorization of establishment with the Ministry of Economy
This first step to a permit to settle lasts from 1 to 4 weeks. It is mandatory to carry out a commercial or craft activity or as a liberal profession, as a self-employed person or as a company. The applicant must prove his professional integrity, his professional qualification for the exercise of the activity requested, his establishment in Luxembourg, the effective and permanent management of the company, his compliance with legal and tax obligations.
Registration in the Commercial Register
This recording lasts about 24 hours.
Registration with the Centre Commun de la Sécurité Sociale
The letter confirming affiliation to social security is obtained approximately 1 week after registration with the CCSS.
Registration with the Administration de l’Enregistrement et des Domaines
This declaration with the Administration de l’Enregistrement et des Domaines (AED) allows you to obtain a VAT number in order to invoice your customers. This step lasts about 2 to 4 weeks.
Merkur : e magazine for Luxembourg companies
The monthly magazine of the Chamber of Commerce of Luxembourg is the magazine of Luxembourg companies, a precious communication tool about the economic activity and the political action in Luxembourg. The consultation of Merkur and the private subscription can be made online on the site of the Chamber of Commerce: www.cc.lu.