Global Registration

How to set-up a company in Luxembourg?

Luxembourg is a small land-locked country in the heart of Europe. Though small in size, it is known for its stable economy and unique tax environment for foreign investors and the wealthy granting Luxembourg the status of a tax haven. It is known for its advancements in Information and Communications technology and biotechnology, coupled with a strong banking and financial system which makes it lucrative for foreign investors to open companies in Luxembourg. This piece of writing lists down the procedure for set-up a company in Luxembourg.

What are the preliminary steps to be taken to set up a company in Luxembourg?   

The following preliminary steps must be taken before beginning the actual procedure of setting up a company in Luxembourg.

1. Formation of the company

The AOA of the company or the company’s instrument of the constitution and any subsequent amendments should be established in writing. Such an instrument of the constitution must be established in presence of a notary if the company being formed is a limited liability company. Following are the types of limited liability companies for which the instrument of the constitution must be prepared in the presence of a notary:

1. Public Liability Company (Societe Anonyme or S.A.)
2. Private Limited Liability Company (Société à Responsabilité Limitée or S.A.R.L.)
3. Partnerships limited by shares (sociétés en commandite par actions)
4. European Companies (sociétés européennes or S.E.)

The notary is supposed to file the original copy of the notarised deed before the company can be registered.

In the following types of companies, there is no requirement for a notary. The instrument of the constitution can be drawn up in a private deed:

1. Partnerships (sociétés en nom collectif)
2. Limited Partnerships (sociétés en commandite simple)
3. Civil Companies (sociétés civiles)
4. Cooperative Companies (sociétés coopératives)

2. Checking the availability of the desired name for the company

Every new company must have a distinctive trade/business name which can easily be distinguished from the names of the existing companies. The promoters can check the availability of their desired name by submitting an online application to the RCS confirming the availability of their name. 

3. Registration and filing fees to be paid

The registration and filing fees are paid online to the RCS. Fees can also be paid in cash at the RCS office’s reception desk in Luxembourg. If the payment is made in cash at the RCS office, then the following additional charges are levied:

1. An additional EUR 20 will be levied for the registration of a non-profit association (ASBL), an agricultural association, a foundation or a ‘natural person’ trader;
2. An additional EUR 10 will be levied for other filings of a non-profit association (ASBL), an agricultural association, a foundation or a ‘natural person’ trader;
3. An additional EUR 80 for all other filings. 

For the following companies, the instruments of constitution/articles of incorporation must be published in full:

• Public Liability Company (Societe Anonyme or S.A.)
• Private Limited Liability Company (Société à Responsabilité Limitée or S.A.R.L.)
• Partnerships limited by shares (sociétés en commandite par actions or S.E.C.A)
• European Companies (sociétés européennes or S.E.)
• Civil Companies (sociétés civiles)
• Cooperative Companies (sociétés coopératives)

For the following types of companies, the instruments of constitution/articles of incorporation must be published in extract form:

• Partnerships (sociétés en nom collectif or S.E.N.C)
• Limited Partnerships (sociétés en commandite simple or S.E.C.S)
• Family owned civil companies (sociétés civiles familiales)

Information to be provided to set-up a company in Luxembourg

In order to set-up a company in Luxembourg, the following information has to be provided for the registration purposes of a commercial company:

• The business name/ trade name of the business;
• The legal form in which the business is incorporated;
• The registered office address of the business;
• The purpose/ business activities to be carried out by the company and
• The date when the company was incorporated and the duration of that company

Further, depending on the kind of business form you have chosen for your company in Luxembourg, the following information needs to be provided:

• The capital structure of the company;
• The partners in the company and the amount of financial commitments;
• The list of directors and their power to bind the company;
• The persons that have been entrusted with oversight of the company and
• The financial year, where the law mandates the publication of annual accounts, is required.

Procedure to set-up a company in Luxembourg

The following procedure should be followed step-by-step in order to set-up a company in Luxembourg:

1. Choosing the name of the company

The first step in the registration of the company is that the entrepreneurs need to choose the commercial brand or name of the company they plan to use. The name availability request must be made to the Luxembourg Business Registers (LBR). On payment of the prescribed fee, the application of the name availability request is processed by the LBR.

There are two types of certificates that are sent after the name availability processing, viz. either the certificate of availability or certificate of unavailability signifying that the proposed company name is available or unavailable to be taken by the applicant respectively. This certificate can only be downloaded and is not delivered by email. The availability of the name does not allow reservation of the name in favour of the applicant. The available name is allocated to the first person to make an application for registration at the RCS (Trade and Companies Register) website.

2. Preparation of the Articles of Incorporation

The entrepreneur wanting to establish a commercial company is required to draw up the articles of incorporation (AOI)^[1]. The AOI can be drawn up in German or French only. If an entrepreneur has prepared AOI in English, he can submit it in English on the condition of subsequent submission of a German or French translation.

For the Limited Liability Companies viz. SARL, SE, SA, SECA, the articles of incorporation need to be drawn up in the presence of a notary.For the Unlimited Liability Companies viz. SENC, SECS, civil companies, cooperative companies, and the AOI can be drawn up as a private deed or in the presence of a notary.

TheAOI must always contain the information related to the company name, its type, object, company’s trade name, share capital, registered office, names of the joint partners, duration of the company, name of the business managers and type of power they hold. In addition to these, additional clauses can be added in AOI. However, expressly forbidden provisions must not be made a part of AOI where the profit or loss is attributed to one of the partners only, deprive certain partners of the profit etc.

3. Blocking of minimum share capital

Before the AOI is signed, the minimum share capital must be deposited in a bank accountin the company’s name. This account should preferably be opened in Luxembourg bank. This amount is blocked till the company is formed. The bank issues a blocking certificate to the entrepreneur on depositing the capital amount. This certificate needs to be submitted to the notary who proceeds with company formation.

The documents required for opening the bank account in the company’s name include the draft of the AOI of the company to be formed, along with a copy of the identity documents of the company’s representatives.

When the company is effectively formed, the notary issues a release certificate to the entrepreneur, which must be submitted to the bank together with the documents, viz. final version of the draft AOI, missing support documents etc. The bank then releases the share capital, making it available to the company.

4. Registration of the Articles of Association

The Articles of Incorporation (AOI) can be filed either in person or electronically. If the registration is done in person, the filing is done at the RCS’s filing assistance office, and it carries an extra charge.

However, if the privately certified AOI are filed electronically with the RCS, a LuxTrust certificate is required. This registration cannot be filed until one month after the AOI has been signed. The documents required for the registration of private deeds are as follows:

• Fully completed application form generated through e-filing system;
• Instrument (or an extract of that) in the PDF format;

In the case of notarised documents, the notary files the notarised documents. After filing the prescribed documents, the registrant is sent an electronic receipt, and the instrument is published in the Electronic Compendium of Companies and Associations.

After the registration with the RCS, to conduct the business operations, specific permits need to be taken by the business to conduct their business. Additionally, companies may also need to register for Value Added Tax (VAT).

Conclusion 

The procedure mentioned above is the standard procedure to open any company in Luxembourg. However, depending on the kind of business activities, several more permissions and processes may be added to set-up a company in Luxembourg for a foreigner. To know more about the opportunities for foreigners in Luxembourg, get the consultation offered by global incorporation experts at Enterslice.

Read our Article: What are the types of business entities in Luxembourg?