Register company in Luxembourg: Introduction
To register company in Luxembourg is hassle-free with Tetra Consultants’ assistance.
Adopting an open economic policy, Luxembourg’s pro-business climate has attracted many foreign investors to incorporate their companies. Recognised internationally as a financial centre, the country’s competitive tax rate and strategic location are core to how the country has attained its reputation as an ideal jurisdiction to incorporate.
Our service package includes everything you will require to set up business in Luxembourg:
- Company registration with the Trade and Companies Register
- Local company secretary and registered address
- Nominee director services
- Corporate bank account opening
- Financial and business license applications
- Annual accounting and tax services
How long to register company in Luxembourg and open a corporate bank account?
- Tetra Consultants will complete Luxembourg company registration within 2 weeks. After receiving due diligence documents of the directors and shareholders, our team will search for the availability of your preferred company name and prepare all required incorporation documents.
- Throughout the Luxembourg company registration process, you will not be required to travel overseas.
- After Tetra Consultants has set up your Luxembourg company, you can expect to receive the documents of your new company including the certificate of formation, Memorandum and Articles of Association as well as register of directors and shareholders.
- Following which, based on your business goals and activities, we will also seek to apply for the necessary business permits so that you can operate your company.
- Within 4 weeks upon registering your Luxembourg company, we will open a corporate bank account with either a local or international reputable bank.
- As such, you can expect your company to be fully operational and ready for business within 6 weeks from engaging Tetra Consultants.
Can a foreigner register company in Luxembourg?
- Full foreign ownership is permitted in Luxembourg.
- In fact, the jurisdiction is currently home to the 2nd largest investment fund domicile, signifying its openness and availability of business opportunities for foreign investors.
- The creation of the Luxembourg Future Fund also seeks to attract and retain foreign capital and innovative businesses to diversify the country’s economy.
How to register company in Luxembourg?
- Tetra Consultants advises you to read through this guide to fully understand the steps required on how to incorporate a company and set up a bank account in Luxembourg.
- By systematically following the 6 steps below, you can expect to start conducting business with your Luxembourg company within 6 weeks.
Step 1: Choosing a suitable corporate entity
- After understanding your business goals and activities, our team of dedicated consultants will recommend the most suitable corporate entity for you to carry out your business. Prior to incorporating a Luxembourg company, you will be advised on the optimum paid up share capital, corporate structure, legislations and whether there is a need to apply for any licenses to operate your business.
Step 2: Reservation of company name
- Tetra Consultants will reserve your preferred company name with the Trade and Companies Register.
Step 3: Preparation of supporting documents to register company in Luxembourg
- In most cases, the directors and shareholders are required to provide basic KYC documents. Some of these documents include the names of directors, certified true passport copies, proof of address, bank reference letter and CV for our internal due diligence checks.
- Our team will also advise and assist clients who are looking to incorporate in Luxembourg with renting local offices and appointing a nominee director. The registered office will be used to maintain all corporate records and official documents whilst the nominee director will primarily assist in liaising with external parties.
- According to the business activity and corporate structure, Tetra Consultants will also draft Articles of Association, business plan and other incorporation documents.
- Your Articles of Association drafted will include key information about your company and its directors, the amount of subscribed share capital, share classes, duration of the company and other information with regards to your business activities.
- Generally, the Articles of Association will have to be translated into Luxembourg’s official languages of either Luxembourgish, German or French. We will assist in providing official translations of the necessary incorporation documents.
Step 4: Filing to register company in Luxembourg
- We will then proceed to file for registration with the Trade and Companies Register.
- After receiving approval, Tetra Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents to your preferred address.
- We will also translate the documents into English for your review and perusal.
- According to your business activities, we will also assist in acquiring a valid business permit where necessary.
Step 5: Corporate bank account opening
- After registration, Tetra Consultants will assist you in opening a corporate bank account. Our team has established partnerships with multiple reputable banks in Luxembourg. We will present your business to each relationship manager and compliance team.
- Typically, a corporate bank account opening will take roughly four weeks. In most cases, the directors and shareholders are not required to travel. However, if travel is required, we will have a representative accompany you to the bank meeting. Alternatively, our team will negotiate with the banks to conduct a conference call instead or to request for a waiver.
- While nominee directors are not necessary for the setup of your company, you may still require one to set up your bank account.
- If necessary, we will provide you with a suitable, fit and proper nominee director.
- The meeting may be conducted in Luxembourgish. In such cases, our team will also send a representative to attend the meeting so that any potential communication barrier can be overcome.
- Once your account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
Step 6: Financial reporting and taxation obligations
- Following the setup of your new Luxembourg corporate home, Tetra Consultants will continue to provide you with the necessary accounting and tax services to ensure that you can continue to legally conduct business while staying compliant to regulatory obligations.
- Our team will also follow up in registering with the Luxembourg Inland Revenue tax authority to comply with your tax obligations.
- Our team of dedicated consultants will timely prepare your firm’s financial statements, corporate tax returns and manage bookkeeping on your behalf.
- Generally, corporate income tax is charged at 15% if the taxable income exceeds €175,000 or 17% where the taxable income exceeds €200,000.
- You can also expect to be levied an additional charge of 7% on your corporate income tax as a contribution to the employment fund.
- Other applicable taxes include property tax, business tax and Value Added Tax.
- Our team of dedicated consultants will continue to clarify any doubts you may have with regards to your company’s obligations.
Types of business entities to consider before you register company in Luxembourg
- There are many types of business structures in Luxembourg, each with varying levels of personal liability protection, tax ramifications, ownership and management flexibility as well as compliance requirements.
- At the start of the engagement, Tetra Consultants will fully understand your business activities and needs before recommending the most optimum business entity in Luxembourg. Some considerations we take into account include the type of business activity, tax obligations and nationalities of shareholders and directors. Our consultants will also offer more information on the requirements imposed to set up these entities.
3 most common business entities
Special Limited Partnership
- Otherwise known as a société en commandite spéciale or SCSp, this business entity is very similar to limited partnerships found in other countries. It aims to offer contractual freedom and structuring flexibility to its users. This partnership is made up of general partners who bear unlimited liability for the business, and limited partners who bear liability up to a pre-agreed amount or for whatever capital they have contributed. In return, limited partners are not entitled to manage the business. As seen from the fact that general partners bear unlimited liability, this company structure does not represent a distinct legal entity.
- To form a SCSp, you will require minimally 2 persons. There are no restrictions or requirements imposed in terms of the minimum paid up capital.
Private Limited Liability Company
- Also known as a Société à responsabilité limitée or S.à r.l., it is a popular choice amongst many foreign investors. This special form of commercial company merges features of a capital company and a partnership. With a private limited liability company, you are not entitled to list on the stock exchange nor transfer your shares freely. Typically, this business entity warrants you protection from unlimited liability. That is, in the event of a winding up, you will not be liable for all debts and obligations incurred by your business.
- Minimally 1 director and 1 shareholder are needed to set up a private limited liability company. You will also be required to meet a share capital contribution of minimally €12,000 (US$14,500) that is fully subscribed and paid up at the time of incorporation. Additionally, you may be subject to compulsory oversight by an internal auditor if you exceed certain thresholds.
Public Limited Company
- With a société anonyme, or S.A., you can benefit from the protection of limited liability and an easy access to capital. Primarily adopted by large businesses, a public limited company allows shares to be freely and easily transferable. Shareholders are protected according to the level of their contribution to the capital. With limited liability imposed on its shareholders, in any event of winding up, you will not have to worry about incurring the debts and obligations of your public limited company.
- To set up a public limited company, minimally 1 director and 1 shareholder are required. A minimum amount of €30,000 has to be met in order to register. The capital can be amassed through subscriptions and be at least 25% paid up. Legally, a public limited company is also required to conduct internal audits if it meets various thresholds.
Other types of business entities
- Also known as an entreprise individuelle, it is the simplest form of business structure and does not separate the legal personalities of the owner and the business. While this provides greater simplicity in operations, it can cause frustrations in the event of a winding up since the proprietor can be personally liable for all debts and obligations incurred by the business. Transfer of business is not allowed and hence, there is no continuity. Unlike other business structures, Sole Proprietors are required to report their business income under their personal income.
- Sole proprietors in Luxembourg are also required to separately register with the relevant authorities to acquire certifications and permits of their relevant industry, which may be agriculture, commerce or trades and crafts. Professional services rendered through a sole proprietorship must also be appropriately registered with their respective professional authority bodies.
- There is no minimum capital requirement, and this can be decided upon by the sole proprietor. In terms of accounting aspects, Sole Proprietors have to keep transparent accounts and file them if their annual turnover exceeds €100,000 (US$121,000).
Societal Impact Company
- As its name suggests, a societal impact company can be adopted only for the main purpose of conducting business in the social and solidarity industries. Also known as a société d’impact sociétal, you can benefit from greater legal protection, a proper fiscal framework and access to public procurement contracts.
- To set up a societal impact company, you have to meet the following requirements. Mainly, your corporate purpose should be to provide support to the vulnerable as well as to contribute towards a specific social cause. There are no requirements imposed on societal impact companies.
- Tetra Consultants recommends that you set up a societal impact company if you are intending to operate a business for the purpose of contributing to a social cause. By operating a societal impact company, you get to benefit from tax exemptions.
- Otherwise known as a société cooperative, this business entity functions as a commercial company with features that include a variable capital, variable number of partners and an absolute non-transferability of shares. Just like a Sole Proprietorship, this business structure does not protect its partners with limited liability. Instead, partners can be indefinitely and jointly liable.
- To form a cooperative company, you will require minimally 2 persons. There are no restrictions or requirements imposed in terms of the minimum paid up capital. It is also required for a cooperative company to appoint and be administered by 1 or more representatives. Companies are also required to appoint minimally 1 internal auditor and maintain registers.
- Tetra Consultants recommends you set up a cooperative company if you have the intended purposes of diversifying your business activity, forming partnerships or reducing operational costs.
Accounting and tax obligations after you register company in Luxembourg
- Accounting and tax considerations are important factors when incorporating your company. By outsourcing your Luxembourg accounting and tax obligations to Tetra Consultants, you can be confident that you will be in the best hands. Our team of consultants will ensure that your firm’s financial statements, corporate tax returns and audits are timely completed without the need for you to travel.
- Additionally, outsourcing your accounting and tax needs to Tetra Consultants will allow you to reduce overhead costs while be ensured of timely reporting and filings. Before the start of the engagement, our accounting team will also keep you updated of all the required deadlines and expectations. Thereafter, we will prepare all required filings in advance to ensure that the stipulated deadlines are met.
Annual Reporting Requirements
- Luxembourg’s financial fiscal year extends from 1st January till 31st December of the same year.
- Generally, limited liability companies which meet or exceed 2 of the following 3 criteria after 2 consecutive financial years are legally bound to perform oversight by an approved statutory auditor. These criteria include:
- balance sheet of total €4.4 million
- net turnover of €8.8 million
- Private limited companies with over 60 shareholders are also legally mandated to conduct compulsory oversight by an internal auditor.
- For all public limited companies, oversight is mandatory and can be conducted by an internal auditor.
- These annual financial statements must be approved within 6 months following the end of the calendar year.
- Upon the approval, they should be lodged within 1 month to the Trade and Companies Register.
- Generally, your annual financial statements should include the balance sheet, the profit and loss accounts, the account balance and the management report.
- You can expect a small government fee for registration and filing your reports.
Corporate Income Tax
- A corporate income tax is levied on resident companies and non-resident companies.
- However, a non-resident company is subjected to lesser tax liability. This means that only Luxembourg-generated income will be liable to tax payments.
- Generally, corporate income tax is charged at 15% if the taxable income exceeds €175,000 or 17% where the taxable income exceeds €200,000.
- You can also further expect an additional 7% charge levied on your corporate income tax payment as a contribution to the employment fund.
- Tax filing for all companies should be submitted to the Luxembourg Inland Revenue tax authority alongside its annual financial statements.
- It is also important to note that businesses contributing to the structural development and improvement of the economy can benefit from tax exemption on a share of the profits.
- Tetra Consultants will continue to advise you regarding your corporate income tax obligations.
Value Added Tax
- For all limited liability companies, you will only have to make Value Added Tax payment of 17% based on the following conditions:
- an annual filing if your annual turnover excluding taxes is less than €112,000 (US$135,000)
- a quarterly filing if your annual turnover excluding taxes is between €112,000 and €620,000
- a monthly filing if your annual turnover excluding taxes exceeds €620,000 (US$750,000)
- Concurrently, when making your Value Added Tax payments, Tetra Consultants will also prepare and submit a declaration and summary statement on your behalf.
- Levied only on the profits of commercial companies, the communal business tax aims to assist the communes of Luxembourg in financing the expenses incurred in providing business facilities.
- Generally, only Sole Proprietors and partnerships making an operating profit and all capital companies will be subjected to the tax.
- Stipulated by the law, a base rate of 3% is levied and can be multiplied by the communal rate to determine the payable amount.
Why register company in Luxembourg?
- According to Transparency International’s 2020 Corruption Perceptions Index, Luxembourg is ranked 9th out of 180 countries when it comes to the relative degree of public sector corruption. This shows how the country is one of the least corrupt in the world.
- Committed to social dialogue, the ‘Luxembourg model’ includes a tripartite discussion board to debate about important economic and social issues before imposing policies. This ‘Luxembourg model’ highlights how the country is receptive to comments and feedback.
- Through the infamous LuxLeaks scandal, the name of Jean-Claude Juncker, the former prime minister of Luxembourg has been tarnished as he was an accomplice to the tax evasion activities of big multinational companies.
- LuxLeaks, or otherwise known as Luxembourg Leaks, was a financial scandal revealing how Luxembourg’s tax rulings were to the advantage of its clients. The scandal highlighted how the country’s tax avoidance schemes were plenty and beneficial to multinational companies located on its shores.
- According to the 2021 Index of Economic Freedom, Luxembourg is ranked the 18th freest, suggesting that the country’s economic policies have been efficient in developing a free and open economy.
- Luxembourg investment in Research and Development is lower than the European Union average, with little to drive further economic growth.
- Luxembourgish, German and French are adopted as the official languages of Luxembourg. Nonetheless, its English proficiency rate remains high. According to the Education First’s 2020 English Proficiency Index, Luxembourg is ranked 11th among 100 countries when it comes to level of proficiency.
- Luxembourg’s welfare system is among the most substantial and elaborated systems in the European Union. Its extensive welfare policies ensure that its residents will always be well taken care of.
- According to the Overseas Security Advisory Council, its 2020 Crime and Safety Report assessed and declared that Luxembourg is a low-threat location with generally a lower crime rate than the United States’ national average.
- Initiating the Luxembourg Cluster led by Luxinnovation, the agency has identified 7 key economic sectors to ensure a sustainable economic growth. This includes biotechnology, ICT, material technology and even space technology, highlighting Luxembourg’s commitment in innovation.
- With a national platform and innovation centre dedicated to fin-tech, the Luxembourg House of Financial Technology aims to shape the future of financial services by connecting and encouraging collaborations.
- Few steps ahead of many jurisdictions, Luxembourg is also ideal if you are looking to start up a company in space technology. With its Space Resources initiative established in 2016, it ensures that resources are available and explored sustainably for peaceful purposes.
- Backed by an independent judiciary, the legal system in Luxembourg is generally competent in procedural matters, being fair and reliable. However, it is also important to note that the judiciary is generally slow in resolving disputes. Hence, if you do land yourself in an unfortunate commercial dispute, it may take some time to resolve.
- In effect since 13 January 2019, the Register of Beneficial Owners law seeks to ensure that the financial system is used for legitimate purposes and not for improper means of money laundering or terrorist financing.
- Its lax laws imposed on business taxation have also led the jurisdiction to attain an infamous name as a tax-haven.
- Luxembourg has been on track when it comes to meeting its environmental commitments. This includes reducing emissions of atmospheric pollutants.
- In its pledge to improve environmental conditions, Luxembourg signed an agreement to support a United Nations Environment-convened network that aims to increase and create more green and sustainable finance initiatives.
Looking to register company in Luxembourg?
- Contact us to find out more about how to register company in Latvia. Our team of experts will revert within the next 24 hours.
What is the best business in Luxembourg?
- The biggest and most successful industry in Luxembourg would definitely be their financial services and banking sector. Given the small size of their domestic market, this sector mainly serves the international market. It is also home to the European Investment Bank, a financial institution of the European Union.
How much does it cost to start a business in Luxembourg?
- While there are no paid-up capital requirements when starting a business in Luxembourg, Tetra Consultants will recommend setting aside at least US$5,000 as your paid-up capital to fund your overhead expenditures as well as initial deposit for corporate bank account opening.
- As for Tetra Consultants’ engagement fees, this depends on the exact services required from Tetra Consultants. Our fees are inclusive of government fees and all fees will be clearly stated in our engagement letter prior to the start of the engagement. Tetra Consultants believes in transparency with our valued clients and there are no hidden fees.
What languages are spoken in Luxembourg?
- It has three official languages, Luxembourgish, French and German. Despite this, English is still commonly spoken and understood given its high literacy rate.
Is Luxembourg a tax haven?
- By the Organization for Economic Co-operation and Development’s official definition and classification, it is not. However, its favourable taxation policies and high levels of banking secrecy have led to associations with tax havens.
How much of my personal income will be subject to tax in Luxembourg?
- Assuming you are a non-resident, you will only be taxed on income earnt domestically. Even then, you will be able to enjoy the money double-tax treaty agreements that Luxembourg is party to.
How does Luxembourg attract such a great amount of foreign funds?
- This is mainly due to the country’s comprehensive and well-supervised financial regulations that offer its investors certainty and protection. Luxembourg also has developed a reputation as one of the main offshore financial centres in the world.