Company Formation in Luxembourg

Navigating the Company Formation in Luxembourg

Luxembourg&'s stable political and economic environment offers foreign investors numerous opportunities for company formation in Luxembourg. It had a GDP per capita growth of 2% in 2022, along with a resilient economy. Along with this, a highly skilled population, and excellent transportation are other factors that make it attractive for foreign investors for company incorporation in Luxembourg. Access to the EU markets makes it attractive for foreign investors due to its large customer base. Furthermore, the recognition of Luxembourg as an international financial centre, its favourable tax structure, and its strategic location are some other factors that make company formation in Luxembourg attractive to foreign investors. Our team has a global presence, and we shall help you with a quick company formation in Luxembourg through our holistic approach.

Types of Business Structures: Company Formation in Luxembourg

There are 8 types of business structures available for foreign investors for company registration in Luxembourg, which have been mentioned below-

Limited Liability Company or Societe a responsabilite limitee (SARL)

A Limited Liability Company is among the most common business structures preferred by investors. It acts as a separate legal entity, and the shareholders have a limited liability.

Public Limited Companies (SA) or Societe Anonyme (SA)

Shares in the public limited companies can be publicly traded. The shareholders in this company are protected from debts and obligations.

Special Limited Partnership

It is similar to limited partnerships. It is famous for offering flexibility to its users. The general partners bear unlimited liability, while the Limited partners have a limited liability. For this type of company registration

in Luxembourg, you require a minimum of 2 persons. There is no requirement for a minimum paid-up capital.

Not-for-profit (ASBL) & Social Impact Companies (SIS)

Not-for-profit companies must have at least three co-founders. This company can&'t engage in any profit-making activity.  Social impact companies can engage in profit-making activities but with some restrictions.

Sole Proprietorship

It is the simplest form of business structure. Popularly known by the name of enterprise individuelle, there is no need for the minimum capital requirement to register this business entity. When it comes to compliance, a sole proprietor has to file annual financial statements if their annual turnover exceeds USD 121,000.

Cooperative Company

Also known as Societe Cooperative, the partners in this business model are jointly liable. To incorporate this company, you require a minimum of 2 persons. There is no minimum paid-up capital for this type of company registration in Luxembourg. It is mandatory to appoint 1 internal auditor and to maintain registers.

General Partnership (SENC)

General partnerships or Societe en nom collectif (SENC) company registration in Luxembourg requires two or more partners. They have unlimited liabilities, no minimum capital requirements, and are similar to sole proprietorships in structure. 

Limited Partnership (SCS)

Limited partnerships or Societe en commandite simple (SCS) company incorporation in Luxembourg require at least two or more partners. One can be a general partner with unlimited liabilities, and the other has to be a limited partner with limited liabilities.

Our Services for Company Formation in Luxembourg

Our foreign business incorporation desk provides you with the following services for your company registartion in Luxembourg-

• Company incorporation in Luxembourg with the Trade and Companies Register of Luxembourg
• Nominee Director Services for company incorporation in Luxembourg
• Corporate bank account services
• Annual accounting services
• Annual tax filing services
• Local company secretary services
• Registered Address services
• Company Name registration services
• Assistance in developing budgets and forecasts

Methodology of Enterslice in Company Formation in Luxembourg

Client-Centric Approach

We at Enterslice focus on the needs of our clients and encourage them to share more details by asking open-ended questions.

Technology-driven Solutions

We at Enterslice use a combination of technologies, AI-based chatbots, and software to streamline your company registration in Luxembourg processes.

Flexibility of Options

We provide customized services as per our client&'s business needs.

Tax Structure: Company Formation in Luxembourg

The types of tax levied by Luxembourg on the companies have been mentioned hereunder-

Corporate Income Tax

It is levied on the resident as well as non-resident companies. Non-resident companies are subject to lesser tax liability.

Corporate income tax is charged at the rate of 15% if taxable income is more than Euro 175,000 or at the rate of 17% if the taxable income is more than Euro 200,000. There is an additional 7% tax levied on your corporate income as a contribution to the employment fund.

All the tax filing along with the financial statements is submitted to the Luxembourg Inland Revenue Tax Authority.

Value Added Tax (VAT)

VAT payment of 17% is charged on all limited liability companies based on the given conditions-

1. If your annual turnover exceeds USD 135,000, you have to do an annual filing.
2. If your annual turnover is between Euro 112,000 and Euro 620,000 then you have to do a quarterly filing.
3. If your annual turnover exceeds USD 750,000, you have to do a monthly filing.

Business Tax

This tax is levied on the profits of the commercial companies. Currently, sole Proprietorships and partnerships making an operating profit, as well as capital companies, are subjected to this type of tax.

Tax Incentives

Luxembourg has an IP Box regime, which provides favourable tax for income that is derived from an intellectual property like patents, trademarks, and copyrights. Luxembourg also offers tax advantages to finance companies.

Eligibility Criteria for Company Formation in Luxembourg

No. of Shareholders

A minimum of one shareholder is required for company formation in Luxembourg. The shareholder can be an individual or a corporate entity. 

No. of Directors

A minimum of one director is required for company formation in Luxembourg.

Nationality or Residency Requirement

No nationality or residency is required for managers and shareholders for company registration in Luxembourg.

Share capital requirement

The requirement for share capital varies from one business structure to another.

Local Registered Office

You must have a local registered office in Luxembourg to engage in company registration in Luxembourg.

Physical Presence

There is no need to be physically present in Luxembourg for your company registration.

Procedure of Company Formation in Luxembourg

Enterslice shall help you understand the steps taken for company formation in Luxembourg

• Choosing the appropriate Business Entity
• Company Name Reservation with the Trade and Companies Register
• Preparing necessary paper checklist for company registration in Luxembourg
• Filing of application form with the Trade and Companies Register
• Applying for permits and licenses
• Opening up of Corporate Bank Account
• Staying compliant with the tax obligations
• Registering for Social Security
• Register for VAT and Income Tax

If you have any queries regarding company formation in Luxembourg, then you can reach out to us, and we will provide you with immediate help.

Necessary papers Required for Company Formation in Luxembourg

The necessary papers required by the individuals seeking company registration in Luxembourg-

• Application form signed by the authorized signatory.
• Copies of the shareholders' or directors' passports.
• Utility bill, credit card statement, or bank statement with the name and residential address of the shareholders or directors.
• Copy of the National Identity Card of the shareholders or directors.
• Particulars of the shareholders and directors.
• The Article of Association of the company must include share capital subscription.

The necessary papers required by the corporate shareholders seeking company formation-

• Certificate of incorporation of the parent company
• Memorandum and articles of Association of the parent company
• Board Resolution giving information about the branch incorporation.

Global Crypto Compliance 2024: Regulations in Every Country

Global Crypto Compliance 2024 provides a comprehensive overview of cryptocurrency regulations across the globe.

Download PDF

What happens after Company Formation in Luxembourg?

It will take around 2 weeks for your company formation in Luxembourg. Firstly, after undertaking the proper due diligence of your company necessary papers, we shall search for the availability of your chosen company name. It is important to note that you will not be required to travel to Luxembourg to register your company.

Secondly, after your company incorporation in Luxembourg is successfully done, you will receive the following necessary papers-

• Certificate of incorporation
• Memorandum of Association
• Articles of Association
• Register of Directors
• Register of Shareholders

Thirdly, we will help you apply for licenses and permits for your new business setup in Luxembourg. Thereafter, we shall help you setup a corporate bank account with a reputable bank.

Accounting Requirements for Company Formation in Luxembourg

The financial year in Luxembourg is from 1 January till 31 December. The annual financial statements should be approved within 6 months from the end of the financial year. These financial statements must include a balance sheet and a profit and loss account. They have to be lodged with the Trade and Companies Register. The fee for company registration in Luxembourg for filing these reports is very small.

Benefits of Company Formation in Luxembourg

Stable Social and Political Environment

The political business environment of Luxembourg has been stable historically. It has a highly developed economy with resilient financial services, steel, and other sectors. Additionally, it also ranks high on the Human Development Index as it offers a high standard of living, healthcare, and educational facilities to its people.

Strong Banking Industry

Luxembourg is a well-known financial centre in Europe. It has a well-established regulatory framework overseen by the Commission de Surveillance du Secteur Financier (CSSF).

Skilled Labour Pool

Luxembourg also provides a highly skilled labour force to the investors engaging in company formation in Luxembourg.

Attractive taxation system

The government of Luxembourg offers various tax incentives to investors seeking company registration in Luxembourg.

Fair Legal System

The judicial system of Luxembourg is very fair and quick when it comes to settling disputes.

Challenges of a Company Formation in Luxembourg

• Obtaining a business license or permits
• Securing Credit
• High Initial cost of business setup in Luxembourg
• Stringent AML (Anti-Money Laundering) Regulations for company registration in Luxembourg

Don&'t worry as our proficient team of foreign business incorporation desk shall help you overcome these challenges and help in swift company formation in Luxembourg.

Best Cities for Company Formation in Luxembourg

• Luxembourg- It&'s a major financial hub where majority of the foreign investors seek to engage in company formation.
• Esch-sur-Alzette- It is an important commercial centre and 2^nd largest city of Luxembourg.
• Leudelange- It is known for its cost-effective company formation process and its proximity to the capital city.
• Kirchberg- It is an important financial centre of Luxembourg, which makes it attractive for foreign investors.

Mistakes to avoid during Company Formation in Luxembourg

The following mistakes must be taken into consideration and avoided for faster company incorporation in Luxembourg-

• Improper necessary papers
• Inaccurate KYC (Know your client) of directors and shareholders
• Choosing an incorrect business entity
• Not staying compliant with annual financial statement filing
• Improper drafting of AoA, MoA

Enterslice&'s Past Credentials in Company Formation in Luxembourg

We have 10+ years of experience in Company formation in Luxembourg. We have a robust network of legal consultants who will help you navigate through the intricacies of company formation in Luxembourg by providing their legal insights and high-quality advice. We streamline your Company incorporation in Luxembourg process, to make it easier for our clients to understand.