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?
A dynamic and stable economy
The Grand Duchy of Luxembourg offers many advantages for creating and owning a business. The Luxembourg economy is diversified and very dynamic: services, finance, industry, high technology, etc. Thanks to its know-how, Luxembourg exports nearly 65% of its production of goods and services. More than 130 banks from 29 countries are based here and generate 28% of GDP. Luxembourg is one of the founding countries of Europe. Today it is the seat of 12 European institutions. The country has direct air links to over 75 destinations.
The country is clearly in a third industrial revolution strategy. It supports over 220 recommendations and projects in this direction. Creative businesses employ 8,000 people. They generate 1 billion euros in turnover. Public funding for R&D has increased tenfold since 2000.
As a result, Luxembourg attracts many talents. Every day, more than 200,000 cross-border workers from France (half), Belgium (a quarter) and Germany (a quarter) cross the border to work in Luxembourg. They represent almost half of the active population in a dynamic labour market.
Finally, it should be noted that Luxembourg ranks 10th out of 125 countries in terms of competitiveness in attracting, retaining and developing its workforce.
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. Every year, Luxembourg is rated AAA for its economy.
An attractive tax system for companies
Luxembourg’s tax system appears to be competitive for companies.
Taxation of companies
Luxembourg companies must pay several types of tax:
- Income tax of 15% of the operating result if the taxable income does not exceed 175,000 euros, 17% above 200,000 euros. A 7% surcharge is applied for the employment fund,
- Municipal business tax calculated on the operating profit, at a rate of 3% after an allowance of 17,500 euros,
- Wealth tax of 0.5% of equity, reserves and retained earnings,
- Value Added Tax (VAT) between 3 and 17% depending on the sector of the company
- Annual compulsory Chamber of Commerce contribution.
Social security contributions
The low wage costs also make it possible to recruit qualified personnel. These are among the lowest in the European Union.
The employee’s share is 12.45% and the employer’s share is 12.16%. The employer must also pay an accident insurance contribution of 1% and a contribution to the employers’ mutual insurance association of a maximum of 2.92% depending on the contribution class.
More information about working in Luxembourg.
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.
Do you want to become self-employed and be an independant worker ? Read more here.
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.
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