Set up a Company in Luxembourg

Procedures to set up a company in Luxembourg are simple. Healy Consultants legally completes Luxembourg incorporation at the Registre de Commerce et des Societies.

A Luxembourg SA or SARL has limited liability to the extent of the subscribed capital of shareholders, and not necessarily the paid up capital.

A minimum of two shareholders and one director is required to set up a Luxembourg SA or SARL company. Shareholders and directors may be individuals or corporate entities of any nationality, and need not be resident in Luxembourg. A Luxembourg SARL can have up to 40 shareholders and if there are under 25 shareholders an annual meeting is not legally required.

Luxembourg is a well-established, respected member of the European Union (EU), with a stable government, economy and legal system. It is therefore straightforward and transparent to set up a company in Luxembourg. Luxembourg is positively ranked as the world's 14th-freest economy, and scores at 95% in terms of investment freedom and capital flows according to the Heritage Foundation's 2010 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets. Furthermore, Luxembourg is positively ranked as the worlds 11th least corrupt country in the 2011 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.

A Luxembourg SA and SARL Societe de Gestion de Patrimoine Familial (SPF), is an excellent, tax-efficient vehicle through which financial assets (e.g. cash and assets on deposit, shares, bonds, depository certificates, trade receivables, monetary market instruments, options and commodities) can be acquired, held and managed. Although it doesn’t pay any corporate taxes, the following taxes are applicable:

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 that are not subject to an income tax comparable to the standard Luxembourg corporate income tax rate. An SPF is also 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$160,000) per year.

Entrepreneurs who set up a company in Luxembourg as a SA or SARL SOPARFI Trading Company obtain tax relief accessing the double taxation treaties Luxembourg signed with more than 40 countries including China, France, Germany, Ireland, Italy, Japan, Netherlands, Singapore, Spain, the UK and US. Furthermore, it must register for EU VAT if annual turnover exceeds 10,000 Euros (US$12,800).

Investors who have set up a company in Luxembourg face no exchange controls in Luxembourg.

Following setting up a company in Luxembourg, Healy Consultants can open a corporate bank account with one of the world's leading retail banks, including HSBC, Standard Chartered and Citibank.

Entrepreneurs who set up a company in Luxembourg must have a minimum share capital of either 12,500 Euros (SARL) or 31,000 Euros (SA), which must be fully paid-up at incorporation.

A Luxembourg SOPARFI Trading Company is subject to Luxembourg corporation tax of 21% tax on global income exceeding 15,000 Euros (US$21,700) and 20% corporation tax on global income below that amount. Corporate income tax is also increased by a contribution of 5% to the unemployment fund. However, tax relief is available via the double taxation treaties Luxembourg signed with more than 40 countries.

In addition to corporate tax, a Luxembourg SOPARFI Trading Company pays a Municipal Business Tax (ICC) ranging between 6% to 12% percent depending on location, which is levied on taxable income above 17,500 Euros (US$25,300). Capital gains realised by the Luxembourg SOPARFI Trading Company is treated as ordinary income and is taxed accordingly. There is a withholding tax of 15% on dividends paid to non-resident shareholders, unless reduced because of the double tax agreements signed by Luxembourg and other states.

Furthermore, a Luxembourg Trading Company pays an annual wealth tax based on the net asset value of the company on the 1st January each year.

Having set up a company in Luxembourg, a company register is available for public viewing containing details of the registered office, share capital, shareholders and directors. However, there is no disclosure of beneficial ownership to the Luxembourg authorities.

Having set up a company in Luxembourg, annual accounts must be submitted to the Registrar of Companies. Healy Consultants provides comprehensive accounting and tax planning services to clients who set up a company in Luxembourg.

If either of the following are valid a Luxembourg SA or SARL will be required to complete an annual audit: (i) balance sheet value is great than EUR3.125 million (ii) sales value is above EUR6.25 million (iii) there are over 50 employees. A Luxembourg SA or SARL SPF is not permitted to carry out any commercial activity, own property, have IP rights or be involved in management, trade or the offer of financial services.

A Luxembourg SA or SARL SPF is not permitted to carry out any commercial activity, own property, have IP rights or be involved in management, trade or the offer of financial services.

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