Incorporation in Luxembourg
Company Formation and Set-up in Luxembourg
Thanks to its progressive approach Luxembourg is an international business hub located in the heart of Europe. The central location of Luxembourg makes it extremely easy to travel to other major start-up hubs in Europe, such as Paris, London or Berlin. Luxembourg is very cosmopolite with more than 45% of the resident being foreigners. Every startup in Luxembourg will have an international outlook from day one.
Luxembourg is regularly among the best countries to invest and to start up a business. Furthermore, Luxembourg is one of the strongest nation brands in the world and Luxembourg is the safest country in the world and Luxembourg city is the safest city in the world.
Below you will find some information about company formation in Luxembourg.
Business permit
Some activities require a business permit. Other professions, such as lawyers, doctors, banking, certain financial services and insurance are covered by different laws. Some “intellectual services”, such as self-employed journalists, are not specifically regulated and do not require any business permit. The condition is that the these activities are carried out by the person in their own name and not under the form of a commercial company.
Companies and individuals carrying out commercial activities must also become members of the Luxembourg Chamber of Commerce. The affiliation is done automatically by the tax authorities. Companies and individuals carrying out skilled crafts trades must become members of the Chamber of Trades. This is done via the filing of an affiliation form.
Generally the company formation lasts usually from four to six weeks in total.
Why make business in Luxembourg
1. Luxembourg is multicultural and multilingual, residents speak an average of 3,6 Languages each
2. Luxembourg has a high-quality infrastructure. Public investment represents over 4% of GDP in 2019!
3. Luxembourg ranks 3rd in terms of open economy worldwide behind Singapore and Hongkong !
4. Luxembourg is stable and political neutral! Only 8 Prime Ministers since 1945!
5. Pro-European country with high European regulatory expertise! 12 European Institutions are headquartered in Luxembourg!
6. 71% of the working population is foreign!
7. Luxembourg ranks 3rd for talent competitiveness!
8. Luxembourg ranks 1st in Europe for efficient and helpful administration!
9. Luxembourg ranks 2nd for logistics performance index !
10. Luxembourg has a diverse economy. 11 industry clusters created since 2002!
Most common company forms in Luxembourg
Private limited liability company – S.à r.l.
The most common form of incorporation in Luxembourg is the private limited liability company (Société à responsabilité limitée – S.à r.l.).
The S.à r.l. is a special form of commercial company that combines features that are characteristic of both capital companies (e.g. the limitation of shareholders’ liability to the extent of their contribution) and partnerships (e.g. the non-transferability of shares in the company). An S.à r.l. can be set up by one shareholder only and it is limited to one hundred shareholders. The shareholders may be natural or legal persons. Incorporating as an SARL requires a minimum share capital of EUR 12,000 and contributions can be made in cash or in kind. In S.à r.l.’s with more than 60 shareholders a general meeting of shareholders must be held at least once a year. Unless the articles of association have been amended to state otherwise, it is not mandatory to hold a general meeting in SARLs with fewer than 60 partners. The company must have a registered seat in Luxembourg.
Simplified limited liability company (S.à r.l.-S)
For entrepreneurs, this special form of incorporation reduces the burden of some of the requirements for forming an S.à r.l. For example, the minimum share capital required to form an S.à r.l.-S is EUR 1, and the company can be formed by private deed, without the need for a notary. In contrast to an S.à r.l. an S.à r.l.-S can only be formed by natural persons. As is the case for conventional SARLs, an SARL-S can have between 1 and 100 shareholders.
Public Limited Company (SA)
The public limited company (société anonyme – SA), together with the private limited liability company (société à responsabilité limitée – SARL), is one of the most common types of company in Luxembourg. Public limited companies can be formed by one or more natural or legal persons. The SA is often the legal form of company chosen by large businesses. An SA must be formed in the presence of a notary. The minimum amount of capital needed to form an SA is EUR 30,000. The capital must be fully subscribed and at least 25 % paid up.
The offer of company forms is not limited to S.à r.l. and S.A., other company forms are also available.
Costs of incorporation in Luxembourg
The main costs of establishing a company are:
- Notary’s fees.
- Amount of share capital to be subscribed.
- Registration duty – fixed rate of EUR 75.
- The registrar’s fee for registration in the trade register and the costs of publication in the RESA.
- Other legal and consultancy fees (advisor, translation, domiciliation, independent management, auditor).
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