Luxembourg, a small nation in Europe, stands apart as a global business hub. Over the years, it has earned a stellar reputation as a prime commercial destination. Located between Belgium, France, and Germany, Luxembourg offers seamless access to the key European markets.
In recent years, Luxembourg has improved in terms of complexity in business environments, currently placed in the 57th position, improving significantly from the 66th rank as published in the previous report. The country is known for its political stability, robust economy, and favorable tax environment. Interestingly, setting up a company in Luxembourg takes just two weeks. For entrepreneurs and MNCs, Luxembourg continues to be dynamic business destination.
In this comprehensive guide, we have explained the process of company formation in Luxembourg. Read on to understand its favourable business environment and how to choose
- The Favourable Business Environment In Luxembourg
- Legal Structures for Luxembourg Company Incorporation
- A Step-By-Step Guide to the Luxembourg Company Incorporation Process
- How are companies taxed in Luxembourg?
- Tax Incentives and Relief in Luxembourg
- Tax Incentives for Foreign Investment
- Professional Consultancy for Company Formation in Luxembourg
The Favourable Business Environment In Luxembourg
Starting a business in Luxembourg brings several strategic advantages to entrepreneurs and new companies. Thanks to its tactical geographical location, the country is located at the crossroads of major European trade routes. This ensures an easy access to a market of 500 million consumers, which explains why companies doing business in Luxembourg manage to grow and prosper so rapidly.
Apart from ensuring political and social stability, the government of Luxembourg is committed to maintaining a liberal legal environment that supports business growth and innovation. Businesses operating in this country benefit from high levels of discretion and confidentiality.
In terms of cross-border financial and capital flows, Luxembourg enjoys adequate freedom. This is particularly essential for MNCs. The easy movement of capital and liberal approach to finance simplifies cross-border transactions.
Evidently, the business environment in Luxembourg fosters growth and encourages foreign investment to benefit both international and local companies.
Legal Structures for Luxembourg Company Incorporation
1. Public Limited Company (Société Anonyme - SA)
2. Private Limited Company (Société à Responsabilité Limitée - Sàrl and Sàrl-S)
3. Partnership Structures
4. Specialized Structures
Cooperative companies (Société Coopérative – SC) are suitable for cooperative ventures, while businesses can also follow the European Company (Societas Europaea – SE) structure, where they can operate on a European scale with a unified management system.
During company formation in Luxembourg, it’s imperative to understand the distinct advantages of each of these structures and choose the right one based on your business goals. Successful businesses rightly consult legal and business advisors to make an informed decision.
A Step-By-Step Guide to the Luxembourg Company Incorporation Process
1. Choose the Proper Business Structure
2. Draft the Articles of Incorporation
3. Authenticate the articles
4. Minimum capital requirements
5. Open a Bank Account
6. Registration with the Trade and Companies Register (RCS)
7. Obtaining a Business Permit
How are companies taxed in Luxembourg?
1. Corporate Income Tax
2. Municipal Business Tax
3. Net Wealth Tax
4. Value Added Tax (VAT)
5. Other Taxes
Tax Incentives and Relief in Luxembourg
- Investment Tax Credits
- Incentives for R&D
- Favorable tax treatment for income generated from intellectual property
- Notional interest deduction on equity
Tax Incentives for Foreign Investment
1. Capital Grants and Financing
2. Tax Relief for New Investments
3. Research and Development (R&D) Incentives
4. Green Technology Investments
5. Double Tax Treaties
Professional Consultancy for Company Formation in Luxembourg
While Luxembourg appeals to global companies and investors with promising commercial avenues, it’s imperative to be on the right track while establishing a business in the country. The IMC Group continues to be the trusted partner for forward-thinking enterprises looking for company formation in Luxembourg. From legal consultancy to assistance in opening a bank account in Luxembourg and comprehensive guidance during the company registration process, businesses can seek every kind of support from this team of experts. With professionals on your side, you can confidently proceed to establishing your new business in Luxembourg.
