Advantages of choosing Luxembourg
Here are some of the main advantages of Luxembourg for company incorporation:
- 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.
- 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.
- Global financial harmonisation: Luxembourg has a large network of double taxation and treaties with various countries, which facilitates convenient accounting and tax optimisation.
- Liberal business laws: Luxembourg has a flexible and business-oriented legal framework that helps entrepreneurs easily set up, manage and grow their companies.
- Internationally oriented business environment: Thanks to its geographical location and language abilities, Luxembourg serves as a platform for international operations, trade and connections.
- Support for innovation: Luxembourg actively promotes innovation and technological development, particularly in fintech, cybersecurity, space technology and other high-tech industries.
- Excellent infrastructure: High-quality telecommunications and transport infrastructure create the conditions for efficient operation and easy connection to other markets.
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.
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:
- 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.
- 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.
- Shareholders: A list of the company's shareholders, including information on their personal details and the amount of their contributions.
- Directors and management: Appointment of directors and other executives of the company who will be responsible for the management and governance of the company.
- Capital contribution: The deposit of share capital by shareholders into a bank account.
- Registration: Officially registering a company with the Commercial Registry (RCS) and obtaining a registration number.
- 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.
- Financial statements: A JSC is required to maintain detailed financial statements and submit them to supervisory and regulatory authorities.
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.
Partnership as a business form
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.
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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:
- Constituent documents:
- 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.
- Founding Agreement: Some legal forms may require a separate agreement where the founders define the rules of cooperation and operation of the company.
- Documents about the persons:
- Passport of identification: Copies of passports of all founders and directors of the company.
- Proof of address: Documents confirming the residential address of each person involved in the company.
- Application for registration:
- Application for company registration: An official statement that provides information about the company, owners, directors and other details.
- Other documents:
- Proof of the registration fee payment: Proof of payment of the required registration fee.
- Power of Attorney: If the company is to be represented by proxies, documents confirming this must be provided.
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.