Company Registration in Luxembourg

Business registration in Luxembourg: advantages of the jurisdiction

When choosing a country to start a business, entrepreneurs often select Luxembourg. This is due to the following business benefits:

• stable political and economic environment;
• full foreign ownership of businesses allowed;
• favorable conditions for foreign investment;
• high level of confidentiality;
• access to EU markets;
• developed banking and financial sectors.

Company registration in Luxembourg: taxation

Companies are considered tax residents of Luxembourg if:

• they are incorporated in Luxembourg and have a registered office in the country;
• their effective management is carried out from Luxembourg.

In this case, companies are subject to:

• Corporate income tax. The standard rate is 17%. If company income exceeds EUR 200,000 in any period, the total tax rate reaches 24.94%.
• VAT. Standard rate is 17%, but it may be reduced to as low as 3% in some cases. For example, reduced VAT applies to most food products, books, pharmaceuticals, as well as water supply, broadcasting, and television services. Financial and healthcare services are exempt from VAT.
• Withholding tax on dividend income. A 15% rate applies when dividends are paid by one resident to another. However, if a company meets the EU Parent-Subsidiary Directive requirements and is a resident of an EU member state, it is exempt from this tax.

What entrepreneurs should know about opening a company in Luxembourg

All Luxembourg companies are required to prepare financial statements.

SA companies must undergo an annual audit conducted by a certified auditor. Reports must be submitted to the Trade and Companies Register within 7 months after the end of the fiscal year.

SARL companies may be exempt from an audit if:

• total balance sheet does not exceed EUR 4.4 million;
• net turnover is below EUR 8.8 million;
• the company employs no more than 50 people.

Entrepreneurs are also required to pay an annual state duty.

A tax number is assigned to the company upon registration and submission of the necessary documents. A VAT number must be obtained if the company’s annual turnover exceeds EUR 30,000.

Requirements for registering a company in Luxembourg

To start a business and incorporate a Luxembourg company, different documents may be required, depending on the chosen form of business. As a rule, at least the following documents are needed:

• notarized articles of association, registered in the Trade Register;
• founding agreement;
• company charter;
• resolution appointing directors.

Additionally, a certificate from the selected bank confirming the deposit of the company’s share capital is required.

If you decide to start a business in Luxembourg, company registration will be easier and faster with our specialists. They will handle the preparation and submission of documents, the registration process, and all other formalities.