What form of ownership should you choose for your Luxemburg-based company?

Many international entrepreneurs choose Luxemburg to register companies there especially if their business activities are connected with Europe in some way. Why is this jurisdiction so attractive for foreign businesspeople? Let us take a look at the reasons why you should register a company in Luxemburg.

Eight reasons to choose Luxemburg for foreign company registration

1. Direct access to Europe

Sitting at the very heart of Europe, Luxemburg is a perfect platform for entering European markets. This tiny country is ideal for developing and testing new products and services. The political neutrality that Luxemburg adheres to contributes to the establishment of friendly working relationships with the neighboring countries. 

 Luxemburg for foreign company registration

2. Favorable business environment

Registering a company in Luxemburg is almost as easy as squeezing a lemon. Besides, there you will find flexible legislation, easy access to state authorities, and farsighted government officials.   

3. Stable economy

Luxemburg boasts an open, stable, and diversified economy. The country’s GDP was 71.1 billion US dollars in 2019. This sort of stability guarantees possibilities for business growth and long-term planning. 

4. Highly qualified, talented, and multilingual workforce

The dynamic labor market in Luxemburg offers wonderful employment opportunities and highly competitive salaries. In an attempt to attract workers with some special stills, the authorities of the country often cover their relocation costs. 

71% of all workforce in Luxemburg are foreigners. The average resident of the country speaks 3.6 languages. Thanks to their multilingual employees, companies domiciled in Luxemburg find it easy to service clients from many national states. The country ranks 8th in the Global Talent Competitiveness Index GTCI in 2020.

5. Logistic hub in Europe

Luxemburg location together with a perfect land, air, rail, and water transportation system makes the country a perfect logistic center. In 2019, the Government of Luxemburg invested 4% of the national GDP into infrastructure development. This is an impressive figure indeed.

6. Financial support to innovative companies

Luxemburg-based companies engaged in innovative and research activities receive financial support in addition to tax incentives. The support comes from the Government and from private organizations as well. 

sign
OFFSHORE COMPANY
FREE EXPERT CONSULTATION

information from an expert on taxes
and possible tax benefits of the jurisdiction
appropriate to the company's structure.

oinformation from an expert on taxes and possible tax benefits of the jurisdiction appropriate to the company's structure.

We’ll contact you in 10 minutes

7. Security and high living standards

Luxemburg is one of the safest countries in the world where you can live. This is a very comfortable place with a top-class healthcare system, high salaries, natural beauties, and cultural diversity. The social security system found in the country is among the most advanced such systems in Europe. According to the 2019 Expat Insider survey, Luxemburg is among the three best countries for expats to build a career. 

8. Beneficial corporate taxation system

In 2020, the corporate tax in Luxemburg is 15% to 17% depending on the amount of company profit. Another 7% goes to the employment fund. 

Companies in Luxemburg also have to pay municipal taxes of 6% to 12%. Corporations are eligible for 17-year tax holidays in the country. 

Luxemburg has signed 83 treaties on avoidance of double taxation with Germany, Great Britain, Spain, Italy, France, Canada, the USA, China, Hong Kong, and many others. The extended network of treaties makes Luxemburg an ideal place to set up a holding company there.   

The standard VAT is 17% in Luxemburg, which is the lowest VAT rate in Europe. What is more, many companies in the country pay a discounted VAT or do not pay the tax at all.  

What types of companies can be established in Luxemburg?

Foreign businesspeople usually register companies in Luxemburg with the following forms of ownership:

  • Public limited company (SA). A notary public can sign the company formation documents. Minimum required charter capital is 30,000 euros. 25% of it (7,500 euros) has to be deposited at the moment of registering the company. An SA allows attracting new stockholders and gives access to capital markets. More than 750 SAs were registered in Luxembourg in 2019. 
  • Limited liability company (SARL). Again, a notary public can sign the company formation documents. Minimum required charter capital is 12,000 euros and it has to be deposited in full at the moment of company registration. SARL shares cannot be freely sold at the stock exchange. More than 6,50o SARLs were registered in Luxembourg in 2019.  
  • Limited liability company, simplified (SARL-S). Only a physical person who has acquired a business permit from the Luxemburg Ministry of Economy can set up this type of company in the country. This opportunity has been available since 2017. The charter capital can be between 1 and 12,000 euros and it has to be deposited at the moment of company registration. This is a private company whose owner has limited liabilities, which makes it dissimilar to a sole proprietorship. In the future, if the business goes well, a SALR-S can turn into a SARL. 

There are other forms of company ownership in Luxemburg too but they are not so popular with foreign businesspeople. 

A SARL in Luxemburg is similar to a PLC in Great Britain or a GmbH in Germany and Austria. This is a corporate entity separate from its owners. 

To register a SARL in Luxemburg at least one director is required. To register an SA – at least three. They can be citizens of any country but EU residents have to hold the directors’ positions in order to obtain some kinds of business licenses. 

The maximum number of SARL stockholders is 100. General Meetings need to be held annually only if the number of company stockholders exceeds 25. SAs do not have any restrictions as to the number of stockholders. The stockholders’ residency does not matter. 

The following documents are required to register a company in Luxemburg:

  • Notarized passport copies for all prospective company shareholders and directors;
  • Proofs of addresses for all of them. 

This is only a basic list of documents. In some situations, additional documents will be required. For instance, to register a company in Luxemburg remotely, you have to issue a Power of Attorney. 

After the company is registered, it has to keep the books and file annual reports regardless of the amount of turnover and types of business activities. There are no requirements as to the place where the corporate documents have to be kept nor to the country where the shareholder meetings need to be held. 

Please contact us via email or WhatsApp (see above) or make use of the live chat. We will gladly help you choose the most appropriate company ownership type for your future Luxemburg-based company. We will also be happy to provide assistance in opening a bank account for your company, in keeping the books for you, in acquiring licenses, and many other things. 

What are the main advantages of registering a company in Luxemburg?

A stable economy, a beneficial taxation system, a high-quality infrastructure, high living standards, an advanced banking sector, qualified and multilingual workforce are the main reasons why you should consider registering a company in Luxemburg.

What is the best form of ownership for a company registered in Luxemburg?

The choice of the form of company ownership will depend upon your business objectives, types of business activities, and the amount of capital that you are prepared to invest. You will also have to decide if you want to publicly trade your company shares. Most often, foreign entrepreneurs registering companies in Luxemburg choose to set up an SA, an SARL, or a SARL-S.

Where can I open a bank account for my Luxemburg-based company?

When the company is registered in Luxemburg, it must have a bank account where it can deposit the charter capital. Usually, accounts are opened with one of multiple Luxemburg banks. There are banks in the country that will open an account for you remotely. They provide client support in many national languages.

Tags:

Please read other interesting articles at InternationalWealth.info portal:

Please help us make the portal even more informative, up-to-date, and valuable for you and your business.

Your email address will not be published.