Luxembourg Business Set Up

Luxembourg business set up is straightforward thanks to Healy Consultants' transparent, logical engagement procedures. Prior to starting a business in Luxembourg, we recommend our clients understand the tax and legal implications of Luxembourg business set up. Some of the points to consider when starting a business in Luxembourg include:

International entrepreneurs forming a company in Luxembourg can do so by incorporating either a Societe Anonyme (SA) or Societe Anonyme a Responsabilite Limitee (SARL) and qualifying as a Luxembourg Societe de Gestion de Patrimoine Familial (SPF), which replaced the 1929 Holding Company in 2006, or a Luxembourg SOPARFI Trading company.

In order to set up an SA or SARL, one director and two shareholders are required. They do not have to be Luxembourg residents. An SA has a minimum capital requirement of EUR31,000 and a SARL has a minimum capital requirement of EUR12,500. The main difference between an SA and SARL is that the SA's capital is split between shareholders, whereas the SARL's capital is split into certificates that are not freely transferable.

When starting a business in Luxembourg, note that a SA or SARL qualifying as a Luxembourg Societe de Gestion de Patrimoine Familial (SPF) is legally exempt from corporation tax, municipal business tax and wealth tax. Furthermore, dividend payments by an SPF are exempt from withholding tax. In addition, capital gains realised by a non-resident individual selling shares in an SPF are not subject to tax in Luxembourg.

After starting a business in Luxembourg through a Luxembourg SA or SARL, Societe de Gestion de Patrimoine Familial (SPF), there are no corporate taxes, however, an SPF is subject to an annual subscription tax of 0.25% on debts exceeding eight times the paid up capital, up to a maximum of 125,000 Euros (US$175,800) per year. An SPF is subject to Luxembourg corporate tax and wealth tax if, in a year, it derives (for more than 5% of its total dividend income) dividends coming from non-listed foreign companies which are not subject to an income tax comparable to the standard Luxembourg corporate income tax rate.

A Luxembourg SA or SARL that qualifies as a Trading Company pays 21% corporation tax on global income exceeding 15,000 Euros (US$21,700) and 20% corporation tax on global income below that amount. However, tax relief is available via the double taxation treaties Luxembourg signed with more than 40 countries.

After starting a business in Luxembourg, a public business register contains details of the registered office, share capital, directors, articles of association and annual accounts.

All Luxembourg companies must file accounts and an annual return. However, only Luxembourg companies that meet one of the following criteria need to have their accounts audited: i) balance sheet value is great than EUR3.125 million, ii) sales value is above EUR6.25 million, or iii) there are over 50 employees.

A Luxembourg SA or SARL company requires a registered office in Luxembourg to which all correspondence is sent. Healy Consultants will be the registered office for our client's company.