Starting your own business: why and how?

Starting or taking over a business in Luxembourg attracts many expats and entrepreneurs. Whether you’re just considering it or ready to take the plunge, understanding the opportunities, challenges, and key steps is essential.

This page helps you plan ahead and make your initial decisions before taking action.

Why start a business in Luxembourg?

Luxembourg offers a particularly favorable environment for entrepreneurship:

• a stable and diversified economy
• a strategic location at the heart of Europe
• an international and multicultural ecosystem
• easy access to decision-makers and networks

The country is also recognized for its political and financial stability, offering a secure environment for business development.

A dynamic and diversified economy, open to the international market

The Grand Duchy of Luxembourg offers numerous advantages for starting and operating a business. The Luxembourg economy is diverse and highly dynamic: services, finance, industry, high-tech, and more.

Thanks to its expertise, Luxembourg exports nearly 65% of its goods and services. More than 130 banks from 29 countries are based there and generate 28% of GDP.

Luxembourg is one of the founding members of the European Union. Today, it is home to 12 European institutions.

The country is connected by direct flights to more than 75 destinations. This facilitates business travel, particularly to London, Geneva, and other European cities. Cargolux operates daily international cargo flights.

Luxembourg, a growing country

The country is clearly pursuing a strategy centered on the third industrial revolution. It supports more than 220 recommendations and projects in this area. Creative industries employ 8,000 people and generate €1 billion in revenue. Public funding for R&D has increased tenfold since 2000.

As a result, Luxembourg attracts many talented individuals and job seekers. Every day, more than 200,000 cross-border workers—half from France, a quarter from Belgium, and a quarter from Germany—cross the border to work in Luxembourg.

Finally, it is worth noting that Luxembourg ranks 10th out of 125 countries in terms of competitiveness when it comes to attracting, retaining, and developing its workforce. The labor market there is very dynamic.

Luxembourg’s Economic Reliability, Financial, and Political Stability

Luxembourg is a constitutional monarchy. Only nine prime ministers have led the country since 1945. Furthermore, the government is formed through a coalition system. This requirement to form alliances and implement a common agenda provides additional political stability.

Furthermore, social dialogue is constructive. Only 4.1 workdays are lost each year due to strikes involving 1,000 workers. It is worth noting that the European average is over 30 days.

Every year, Luxembourg receives an AAA rating from credit rating agencies.

Attractive Taxation for Businesses in Luxembourg

In Luxembourg, the tax system is highly competitive for businesses compared to other European countries.

Controlled taxation for Luxembourg businesses

Luxembourg companies are subject to several types of taxes:

• income tax at a rate of 15% of operating profit if taxable income does not exceed 175,000 euros, and 17% on amounts exceeding 200,000 euros. A 7% surcharge is applied for the employment fund,
• municipal business tax calculated on operating profit, at a rate of 3% after a deduction of €17,500,
• wealth tax at a rate of 0.5% of equity, reserves, and retained earnings,
• Value Added Tax (VAT) ranging from 3% to 17% depending on the company’s sector
• the mandatory annual Chamber of Commerce membership fee.

Nevertheless, the overall tax burden for businesses remains reasonable and allows them to continue investing.

Low social security contributions in Luxembourg

Low payroll costs also make it easier to recruit qualified staff. These costs 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 a 1% accident insurance contribution and a contribution to the employers’ mutual insurance fund of up to 2.92%, depending on the contribution class.

If you choose to work as a self-employed individual, you will also pay these contributions, both the employer’s and the employee’s portions. However, you will be eligible for social benefits, including access to unemployment benefits as a self-employed person.

Luxembourg, Start-up Nation

Luxembourg defines itself as a “start-up nation.” Significant resources are dedicated to welcoming start-ups and facilitating their launch.

Today, there are over 800 registered start-ups in Luxembourg. With its manageable size, Luxembourg offers the opportunity to test products or services on a small, representative sample of an international population.

Furthermore, it is easy to recruit from a talent pool across many fields of expertise, featuring diverse international and multicultural profiles.

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

Learn more about Luxembourg, startup nation.

Starting a business in Luxembourg: Is it right for you?

Starting a business can meet various needs, particularly for expats:

• finding a flexible professional role
• leveraging existing expertise
• to change careers or find new meaning in your career
• testing a project before returning to salaried employment

Beyond the professional project, entrepreneurship often involves personal growth: repositioning oneself, building confidence, and adapting to a new environment.

Starting or buying a business: which should you choose?

When you’re ready to take the plunge, one question often comes up: should you start your business from scratch or take over an existing business?

These two options follow different logics. The choice will depend on your situation, your experience, but also your risk appetite and your need for security.

Starting Your Own Business

Starting a business means starting from scratch to build a venture that reflects who you are.

The advantages:

• total freedom in choosing your business, your positioning, and your structure
• the opportunity to create a business aligned with your values, personal circumstances, and pace
• a gradual ramp-up

Points to watch out for:

• the time required to build a client base and generate revenue
• the need to structure the entire project on your own (service offering, communication, organization)
• a startup phase that can sometimes be uncertain

This option is often preferred by people changing careers or living abroad who want to build a customized and flexible business.

Taking over a business

Taking over a business involves acquiring an existing business, along with its history, client base, and organizational structure.

The advantages:

• a business that is already up and running with existing revenue
• an established customer base and partners
• faster visibility into profitability

Points to watch out for:

• the need to carefully analyze the company’s financial and legal situation
• integration into an existing structure and culture
• often a larger initial financial investment

A business takeover can be reassuring if you want to secure your project, but it requires thorough preparation and appropriate support.

How do you make the right choice?

There is no single answer. The right choice is the one that fits your situation and your priorities.

You can ask yourself a few key questions:

• Do I need quick financial security, or can I accept a development phase?
• Do I want to build a business from scratch or join an existing organization?
• What level of risk am I willing to take?
• What resources (time, network, funding) do I have available today?

Taking the time to clarify these points will allow you to make a more informed choice that aligns with your life goals.

Taking Action: Practical Steps

Once your project is clear, it’s essential to understand exactly the steps, legal structure, and obligations you need to follow.

Check out our guide for entrepreneurs in Luxembourg to learn about the administrative steps, legal structures, and tax considerations in detail.

Merkur: the magazine for Luxembourg businesses

The Luxembourg Chamber of Commerce’s monthly publication, Merkur, is THE go-to business magazine in Luxembourg. It serves as a valuable resource for information oneconomic activityand political developments in Luxembourg.

You can view Merkur and subscribe online at the Chamber of Commerce website : www.cc.lu.

Interested in working as a freelancer in Luxembourg? Find out more here.

To explore the many benefits of living in Luxembourg, its opportunities, and its challenges, read our article on what you need to know to settle in the Grand Duchy here.