Company registration in Luxembourg - YB Case 2024
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Luxembourg

Company registration in Luxembourg

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You can register a company in Luxembourg by either visiting our office in person or completing the process remotely through the internet.

Features of jurisdiction

Luxembourg is a small sovereign Western European state, a member of the European Union, the Organisation for Economic Co-operation and Development and Benelux. According to the 2021 rankings, Luxembourg is considered the richest country. Despite its small territory, Luxembourg is a well-known financial centre, where thousands of investment funds are based due to its business-friendly economic environment and legislation encouraging such investments. The country has the second largest stock market in the world after the USA.

  • Business areas in demand

    Due to economic and legislative peculiarities, the most popular areas of business in Luxembourg are: asset saving, asset management through foundations, trusts.

  • Possibility of remote registration

    Remote incorporation of a Luxembourg company is possible.

  • Corporate taxes

    Luxembourg has a progressive corporate tax rate starting from 15% and higher (for SARL). Depending on the legal form of organization, tax exemptions are possible.

  • Attitude towards foreign investors

    Luxembourg is open to foreign investment, making it a sought-after jurisdiction for foreign entrepreneurs to establish a business.

  • Banks

    Banque de Luxembourg, Banque Internationale a Luxembourg SA, Novo Banco Luxembourg.

  • Legal system

    Luxembourg's legal system is based on the continental system of law, similar to France and Germany.

Company registration process in Luxembourg

Company registration in Luxembourg takes 1.5 weeks and includes the following steps:
Initial consultation
Meeting with YB Case representatives at the Luxembourg office to clarify the details and requirements of the client. Start of the company incorporation process in Luxembourg (initial consultation is possible in a remote format).
Name reservation
The company name must not be related to the purpose of the company and must be completely unique from any other companies already incorporated in Luxembourg.
Filing the application for company registration in Luxembourg
The applicant prepares the company's articles of association to be notarised, completes the registration documents and submits them to the Trade and Companies Register. Some activities require the application for a business licence.
Review of the Luxembourg company registration application by the regulator
After receiving all the necessary documents, the regulator (Trade and Companies Register) considers the application and decides on the incorporation of the company in Luxembourg
Receipt of the certificate of incorporation
Following the authorisation of the company in Luxembourg, the founders receive a certificate of incorporation containing the company's registration number. After successful incorporation, the Articles of Association are published in the register and in the official Gazette.

Primary prerequisites

  • Minimum paid-up capital depends on the PFD and type of activity
  • Number of founders depends on the GFC and activity type
  • Registered local address
  • Minimum one director (no residency requirements)
  • Filing of financial statements once a year
  • Annual meeting of members (can be held remotely)
Company registration in Luxembourg

Company registration in Luxembourg

In the midst of Europe's financial renaissance and legal transformation, one of the most promising countries is Luxembourg. It is a place full of history and cultural diversity and plays an important role in the modern business world. When it comes to registering a company in Luxembourg, the business-minded are offered outstanding prospects in the areas of finance, innovation and international cooperation. In this context, the study of the company registration process in this country is of particular relevance, as it is a key step on the way to achieving certain business goals in the context of European dynamics. We will discuss all the peculiarities that businessmen planning to open a company here need to know.

Advantages of choosing Luxembourg

Here are some of the main advantages of Luxembourg for company incorporation:

  1. Stable economy and financial system: Luxembourg is noted for its robust economy and stable financial system, making it an attractive location for entrepreneurship and investment.
  2. Tax advantages: Companies can benefit from low corporate taxes and no dividend tax. This makes it an ideal choice for businesses looking to optimise their tax liabilities.
  3. Global financial harmonisation: Luxembourg has a large network of double taxation and treaties with various countries, which facilitates convenient accounting and tax optimisation.
  4. Liberal business laws: Luxembourg has a flexible and business-oriented legal framework that helps entrepreneurs easily set up, manage and grow their companies.
  5. Internationally oriented business environment: Thanks to its geographical location and language abilities, Luxembourg serves as a platform for international operations, trade and connections.
  6. Support for innovation: Luxembourg actively promotes innovation and technological development, particularly in fintech, cybersecurity, space technology and other high-tech industries.
  7. Excellent infrastructure: High-quality telecommunications and transport infrastructure create the conditions for efficient operation and easy connection to other markets.
All in all, Luxembourg is at the forefront of business innovation leadership in Europe, providing entrepreneurs with exceptional opportunities to realise their ambitious business plans in a sustainable and profitable environment.

Requirements for non-residents

For a non-resident planning to incorporate a company in Luxembourg, there are a number of specific steps and conditions to consider. This process involves a number of formalities and requirements, but it can be quite transparent and efficient due to the country's favourable business environment.

Firstly, a non-resident must determine the form of business activity that he plans to carry out. This can be a joint-stock company (Société Anonyme - SA), a limited liability company (Société à Responsabilité Limitée - SARL) or another appropriate form depending on the business model and objectives. We will discuss each of them below.

Next, you should determine the company's share capital, which may vary depending on the form of business and legal requirements. After that, you need to open a bank account and deposit money.

For registration, a non-resident must provide all the necessary documents, such as the company's charter, the foundation agreement, a certificate of registration of shareholders or members of the company and other documents that may be required depending on the specific situation.

The company's registered office in Luxembourg must be indicated and the management and shareholders or members of the company must be identified.

One of the important conditions is the presence of a local resident (individual or legal entity) as a director or representative of the company. This is a requirement to ensure the company's relationship with local authorities and regulators.

In addition, it should be noted that some industries, such as financial services, may have additional licensing requirements.

How to become an individual entrepreneur?

The "sole proprietorship" business form in Luxembourg is defined as an opportunity for one person to engage in entrepreneurial activity without establishing a legal structure. This means that the person personally bears all the responsibilities and obligations associated with the company.

There are several key steps to take to register. First, you need to choose a business name that meets the legal requirements and is unique. Next, the person must apply to the business registration office ("Guichet Unique") to submit an application and the necessary documents. This includes information about the person, the nature of the activity, the planned scope of work and other relevant information.

You will then receive a registration number that identifies your activity. Next, you will need to register with the local tax authority and obtain a tax number.

If your activities are subject to licensing or special permits, you will need to submit the relevant applications and documents to obtain these permits.

Public limited liability company

This form of doing business allows you to raise capital from investors by issuing shares on the public market and at the same time maintain limited liability of the owners for the company's obligations.

To establish and register an SA in Luxembourg, a number of mandatory steps must be taken:

  1. Share capital: Determination of the share capital that must be contributed by the shareholders at the time of the company's establishment. This plays an important role in determining the financial strength of the company and the level of risk for investors.
  2. Memorandum of association: The memorandum and articles of association define the rules of operation, internal organisation, rights and obligations of shareholders, management structure and other important aspects.
  3. Shareholders: A list of the company's shareholders, including information on their personal details and the amount of their contributions.
  4. Directors and management: Appointment of directors and other executives of the company who will be responsible for the management and governance of the company.
  5. Capital contribution: The deposit of share capital by shareholders into a bank account.
  6. Registration: Officially registering a company with the Commercial Registry (RCS) and obtaining a registration number.
  7. Public information: In accordance with legal requirements, a joint-stock company is obliged to provide public information about its activities, financial position and decisions made by shareholders.
  8. Financial statements: A JSC is required to maintain detailed financial statements and submit them to supervisory and regulatory authorities.
The main advantage of a JSC is the ability to raise capital by selling shares on the public market, which allows it to attract investment resources for the company's development. On the other hand, the owners of a JSC have limited liability for the company's obligations, which allows them to share risks with other shareholders and protects their personal assets.

SARL registration

This form creates an opportunity for several participants to pool their financial resources and ideas to carry out joint business activities. One of the main advantages of a SARL is that the owners are limited liable for the company's obligations only to the extent of their contributions to the share capital. This means that the personal assets of the participants remain protected from possible risks associated with the company's activities.

To establish a SARL, it is necessary to determine the share capital, which can be divided among the shareholders in accordance with their contributions. In addition, it is necessary to draw up an agreement on the establishment of the company, which defines the rules of operation, distribution of profits, power and other aspects of the company's activities. A SARL is also required to maintain financial statements and comply with public information requirements.

Due to its flexibility and simplified structure, the SARL is an attractive option for smaller and medium-sized businesses, as well as for groups of businesses seeking to operate jointly with limited personal liability. This form of business allows for the pooling of resources and knowledge of several participants to achieve common goals while maintaining the important aspect of protecting the owners' personal assets.

Partnership as a business form

A partnership is
a legal form of joint activity between two or more persons. In Luxembourg, partnerships can take different legal forms, such as a limited liability partnership (SCS - Société en Commandite Simple) and a limited liability partnership with shares (SCA - Société en Commandite par Actions).
Both forms have their advantages and limitations. They allow for the pooling of resources and ideas of several participants to carry out joint business activities. However, it is important to note that owners may have limited or additional liability depending on their role in the partnership. When choosing a form of partnership, it is important to carefully assess the needs and objectives of the partners and determine the best option for the joint venture. This may require the advice of a business expert, and we can provide it.

European company in Luxembourg

Establishing a Societas Europaea or SE is an important step for those wishing to operate internationally and cooperate with different jurisdictions within the European Union. This legal form provides an opportunity to create a single company that is authorised to operate in different EU member states.

To set up a European company in Luxembourg, there are some important steps to follow:

  • Preparation of articles of association: Defining the rules and conditions of the company in the articles of association, including organisational structures, governance, shareholder rights and obligations.
  • Incorporation: Deposit of the share capital, which must be declared and paid into a special account.
  • Registration: Submission of documents for the registration of a European company with the authority responsible for company registration in Luxembourg.
  • Shareholder notification: Involving shareholders in the decision to establish a European company.
  • Establishment of management bodies: Determining the composition and functions of the governing bodies, such as the management board and supervisory board.
  • Preparation of documents: Preparation of the necessary documents, including articles of association, contracts and other documents required for the legalisation of activities.
  • Registration in other countries: If necessary, registration of a European company in other EU member states where it is planned to operate.
  • Disclosure of information: Ensuring that the necessary information about the company is made public in accordance with legal requirements.
Please note that the authorised capital in such cases must be at least EUR 120 thousand.

Tax system in Luxembourg

Luxembourg's tax system is known for its low tax rate and favourable conditions for entrepreneurship and investment. The main features of the tax system include the following aspects:

  1. Corporate Income Tax (CIT): Luxembourg has one of the lowest corporate income tax rates in Europe. This tax is 15% for general companies and can be even lower for certain types of companies specialising in the financial and investment sectors.
  2. Personal income tax (PIT): The personal income tax system is progressive, with tax rates depending on the amount of income. However, middle and high incomes can enjoy relatively low tax rates compared to other European countries.
  3. Withholding tax: Withholding tax is generally applied to payments made to non-residents. The withholding tax rates may vary depending on the type of payment but are often quite low or even exempted if tax treaties are in place.
  4. Value-added tax (VAT): The standard rate of value-added tax in Luxembourg is 17%. There is also a reduced rate of 8% for certain goods and services.
  5. Convenient infrastructure for international companies: Luxembourg offers special conditions for businesses operating in the financial sector, such as funds and hedge funds. There are also special tax regimes for intellectual property, which makes the country attractive to technology companies.
  6. Tax treaties with other countries: Luxembourg has tax treaties with many other countries, which helps to avoid double taxation and provides more stability for international operations.
  7. Overall, Luxembourg's tax system provides companies and investors with the opportunity to use their resources efficiently, attract investment and operate in low taxation and favourable business environment.

Documents for company registration in Luxembourg

To incorporate, you usually need to submit some documents and follow certain steps. Here are the main documents and steps that may be required:

  1. Constituent documents:
    1. Memorandum and Articles of Association: This document contains the basic rules and conditions of the company's operation, such as its name, purpose, ownership structure, management and other aspects.
    2. Founding Agreement: Some legal forms may require a separate agreement where the founders define the rules of cooperation and operation of the company.
  2. Documents about the persons:
    1. Passport of identification: Copies of passports of all founders and directors of the company.
    2. Proof of address: Documents confirming the residential address of each person involved in the company.
  3. Application for registration:
    1. Application for company registration: An official statement that provides information about the company, owners, directors and other details.
  4. Other documents:
    1. Proof of the registration fee payment: Proof of payment of the required registration fee.
    2. Power of Attorney: If the company is to be represented by proxies, documents confirming this must be provided.
Additional documents may be required for a specific legal form and type of activity. It should also be borne in mind that the language and formal requirements may change over time, so it is recommended to contact a professional advisor or lawyer to help prepare all the necessary documents and ensure that they are properly submitted to the relevant authorities in Luxembourg.

Conclusion

Luxembourg is noted as one of the most attractive jurisdictions for company incorporation in Europe due to its favourable business environment and low tax structure. The choice of different legal forms, such as a public limited company, SARL or European company, provides entrepreneurs with a wide range of options for setting up and developing their businesses. The simplified registration procedure, the availability of tax incentives for certain types of activities, and the possibility of concluding tax treaties with other countries make Luxembourg an attractive destination for entrepreneurs and investors from all over the world. It is important to bear in mind that belonging to such a competitive business community requires a fairly detailed study of legal aspects, documentary preparation and, if necessary, consultations with lawyers or business experts.
FAQ

How to choose the right business form?

The best option is to turn to professionals. We provide full consultations, studying your goals, needs, opportunities, etc.

Why open a bank account in Luxembourg?

It is necessary to comply with the law, as you will have to officially calculate salaries, make payments and prepare financial reports. In addition, you need it to pay taxes.

Do I have to be a citizen of the country?

No, non-residents can also open their own company. However, some types of companies require at least one employee with citizenship or even a manager. We've covered these details above.
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