Why and how to set up your own business?

Owning a business in Luxembourg

Would you like to set up or buy a business in Luxembourg? Here you'll find all the information you need to get started.

Why have a company in Luxembourg?

A dynamic, diversified economy with an international outlook

The Grand Duchy of Luxembourg offers many advantages for setting up and running a business. The Luxembourg economy is diversified and highly dynamic: services, finance, industry, high-tech, etc.

Thanks to its know-how, Luxembourg exports almost 65% of its production of goods and services. More than 130 banks from 29 countries are based here, generating 28% of GDP.

Luxembourg is one of the founding countries of Europe. Today, it is home to 12 European institutions.

The country has direct air links to over 75 destinations. This facilitates business travel, particularly to London, Geneva and other European cities. Cargolux operates daily international cargo services.

Luxembourg, a growing country

The country is clearly committed to a third industrial revolution strategy. It supports over 220 recommendations and projects in this direction. Creative businesses employ 8,000 people. They generate sales of 1 billion euros. Public funding for R&D has increased tenfold since 2000.

As a result, Luxembourg is a magnet for talent and job seekers. Every day, over 200,000 cross-border commuters from France (half), Belgium (a quarter) and Germany (a quarter) cross the border to work in Luxembourg.

Last but not least, Luxembourg ranks 10th out of 125 countries in terms of competitiveness in attracting, retaining and developing its workforce. The labor market is very dynamic.

Luxembourg's economic reliability, financial and political stability

Luxembourg is a constitutional monarchy. Only 9 prime ministers have held the country's reins since 1945. What's more, the government is formed by a system of coalitions. This obligation to create alliances and a common program to implement lends additional political stability.

In addition, social dialogue is constructive. Only 4.1 working days are lost each year with 1,000 workers on strike. The European average is over 30 days.

Every year, rating agencies give Luxembourg an AAA rating.

An attractive tax environment for companies in Luxembourg

Compared to other European countries, Luxembourg's tax system is highly competitive for businesses.

Controlled taxation for Luxembourg companies

Luxembourg companies must pay several types of tax: 

  • income tax: 15% of operating income up to 175,000 euros, 17% above 200,000 euros. A surcharge of 7% is applied to the employment fund,
  • municipal business tax calculated on operating profit, at a rate of 3% after an allowance of 17,500 euros,
  • wealth tax of 0.5% of shareholders' equity, reserves and retained earnings,
  • Value-added tax (VAT) of between 3% and 17%, depending on the company's sector.
  • mandatory annual Chamber of Commerce membership fee.

Nevertheless, the overall tax burden on businesses remains reasonable, enabling them to continue investing.

Low social security contributions in Luxembourg

Low wage costs also make it possible to recruit qualified personnel. These are among the lowest in the European Union.

The employee portion is 12.45% and the employer 12.16%. The employer must also pay an accident insurance contribution of 1% and an employer's mutuality contribution of up to 2.92%, depending on the contribution class.

Luxembourg, Start-up Nation

Luxembourg defines itself as a "start-up nation". Numerous measures are in place to welcome start-ups and facilitate their launch. 

Today, more than 500 start-ups are based in Luxembourg. With its human scale, Luxembourg offers the opportunity to test products and services on a small sample of the international population.

Moreover, it's easy to recruit from a pool of talent in numerous fields of expertise, with varied international and multicultural profiles.

Finally, access to public and private decision-making bodies is relatively straightforward.

Find out more about Luxembourg, startup nation. 

How to set up a company in Luxembourg

Setting up a commercial company: SARL and SA

The 2 most common forms of commercial enterprise in Luxembourg are the SARL and the SA.

Setting up a Société à Responsabilité Limitée (SàRL) in Luxembourg

The Société à Responsabilité Limitée (SàRL) requires a capital of 12,000 euros and a minimum of 2 shareholders. The registered office must be located in the Grand Duchy of Luxembourg. The director need not be a Luxembourg national.

To set up your company, you'll need to go through a notary. The notary will draw up the articles of association. You'll also need to take the necessary administrative steps to register your company with the RCS (Registre de Commerce et des Sociétés).

The company is subject to a number of taxes, including a fixed registration fee, commercial tax, wealth tax, corporate income tax and VAT.

The advantage is that the company is fiscally "opaque". Partners are not taxed personally, and their liability is limited to their personal assets.

In the case of a simplified limited liability company (SARL simplifiée), incorporation can be by private agreement. Capital must be between 1 and 11,999 euros.

Setting up a Société Anonyme in Luxembourg

A Société Anonyme requires capital of 30,000 euros. A single shareholder is sufficient. This type of company is best suited to large corporations. However, it can also be chosen by SMEs, as bearer shares can be sold more easily.

Opting for a SOPARFI tax regime in Luxembourg

Sociétés de Participations Financières (including SAs, SARLs, etc.) can opt for a SOPARFI tax regime. To do so, they must hold and manage financial interests in other companies (subsidiaries).

The advantage of the SOPARFI is that, under certain conditions, capital gains and dividends are tax-exempt. However, the basic tax applied is higher.

Ask your accountant, notary or lawyer about the precise characteristics of this type of company.

Find out more about entrepreneurship in Luxembourg.

Merkur: magazine for Luxembourg companies

The Luxembourg Chamber of Commerce's monthly Merkur is THE Luxembourg business magazine. It is a valuable source of information on economic activity andpolitical action in Luxembourg.

Merkur can be consulted and subscribed to online at the Chamber of Commerce website www.cc.lu.

Would you like to work as a freelancer in Luxembourg? Find out more here.

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