Luxembourg company registration

Luxembourg company registration

DOING BUSINESS IN LUXEMBOURG

Since 2003, Healy Consultants has assisted our Clients with starting business in Luxembourg. Our services include i) Luxembourg company formation services ii) corporate bank account opening services in Luxembourg and abroad iii) assistance to open merchant accounts and secure corporate finance iv) employee recruitment and relocation strategies and v) office rental solutions in Luxembourg.

Luxembourg business setup summary

  1. Luxembourg is a great place for the registration of a holding company, with two entities most commonly used being the SOPARFI and the SPF. See our business entities page for further details;
  2. While resident directors are not necessary for incorporation of a company in Luxembourg, the local authorities will require such appointment before i) the company can trade with customers and/or ii) access double taxation avoidance treaties;
  3. Opening a corporate bank account in Luxembourg can be done without registration of a local company. See our corporate bank account opening services page for more details on available banking solutions;
  4. Some of our Clients request us to obtain work permits to be able to do business in Luxembourg. See this page for further information on the different types of visas available in this country.
SummaryLLCSOPARFISPFIP holdingLimited PartnershipPLCBranch
Best use of company?Trading CompanyHolding CompanyWealth ManagementReceive IP incomeProfessional servicesEU IPOConsolidated Accounts
Legally tax exempt if properly structured?NoYesYesNoYesNoYes
Corporate bank account location?ABN AMROHSBCBarclaysCitibankBNP ParibasStandard CharteredCommerzBank
Client must travel to Luxembourg?NoNoNoNoNoNoNo
Can secure trade finance?YesNoNoNoYesYesYes
Limited liability entity?YesYesYesYesNoYesNo
VAT payable on sales to local customers?Yes, 17%Yes, 17%Yes, 17%Yes, 17%Yes, 17%Yes, 17%Yes, 17%
Withholding tax on payments to overseas owners?15%15%15%15%15%15%0%
Average total engagement costs?€17,170€23,170€23,170€23,170€19,300€22,455€21,500
Average total engagement period?2 months3 months3 months3 months2 months3 months3 months
Accounting and tax considerationsLLCSOPARFISPFIP holdingLimited PartnershipPLCBranch
Statutory corporation tax payable?21%0%0%1%0%21%21%
Must file an annual Luxembourg tax return?YesYesYesYesNoYesYes
Effective corporate tax rate on net profits of €250,000?20.5%0%0%1%0%20.5%20.5%
Must file annual financial statements?YesYesYesYesNoYesYes
Investment income is tax exempt in Luxembourg?NoYesYesYesYesNoNo
Access to double taxation treaties?YesYesYesYesNoYesYes
This entity enjoys Government incentives?YesYesYesYesNoYesYes
Monthly VAT reporting to the Government?YesNoNoNoYesYesYes
Legally tax exempt entity?NoYesYesNoYesNoNo
Dividends received are legally tax exempt?NoYesYesYesYesNoNo
Company registrationLLCSOPARFISPFIP holdingLimited PartnershipPLCBranch
Resident director\partner\manager required?YesNoNoNoNoYesYes
Minimum number of shareholders\partners?111121Parent company
Minimum number of directors/managers?1111131
Minimum paid up share capital?€12,400€12,400€12,400€12,400None€31,000None
Shelf companies available?YesNoNoNoNoNoNo
Time to incorporate a new entity?2 weeks2 weeks2 weeks2 weeks3 weeks4 weeks4 weeks
Can easily convert to a local PLC company?YesYesYesYesNoYesNo
Can have preference shareholders/partners?YesYesYesYesYesYesNo
Business considerationsLLCSOPARFISPFIP holdingLimited PartnershipPLCBranch
Can invoice local customers?YesNoNoNoYesYesYes
Can hire local staff?YesYesYesYesYesYesYes
Can rent local office space?YesYesYesYesYesYesYes
Secures a residence visa for business owner?YesYesYesYesYesYesYes
Good entity for trademark registration?YesNoNoYesYesYesYes
Other useful informationLLCSOPARFISPFIP holdingLimited PartnershipPLCBranch

Luxembourg has signed free trade agreements?Yes, see this page
This country is a member of WIPO and TRIPS?Yes
The country is a member of the ICSID?Yes
Average customs duties suffered?1%
Government foreign investment approval is required?No
Average monthly office rental? (€ per sq. m.)€65
Minimum statutory monthly salary?€1,922
Average monthly € salary for local employees?€4,810
€ deposit interest rate? (1 year average)0.25%
US$ deposit interest rate? (1 year average)0.05%
Overseas remittance currency controls?No
Public register of shareholders and directors?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Excellent
Crowd funding available in this country?Yes


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  • Advantages and disadvantages

    Advantages of Luxembourg company registration

    Luxembourg business registration facts

    1. Our Clients willing to register a holding company in Europe often choose Luxembourg because:
      • Foreigners willing to establish their holding company in Luxembourg usually use a SOPARFI (Société de participations financières). Such holdings legally exempt from all local taxes on received dividends including i) corporate income tax ii) capital gains tax and iii) withholding tax, provided they hold at least 10% shares in an EU resident subsidiary;
      • Dividends received from subsidiaries from non EU countries can still be legally tax exempt provided that i) Luxembourg and the country of the subsidiary have signed a double taxation avoidance agreement and ii) the subsidiary is subject to a corporate tax rate of at least 21%;
      • Luxembourg financial assets holding company (SPFs) are alternative vehicles used to manage a family privately-owned investment portfolio. They can also be legally tax exempt from all local taxes including corporation tax, capital gains tax and withholding tax;
      • Registering a Luxembourg company to hold patents, trademarks and registered designs also confers tax advantages, as royalty income on these rights benefit from a reduced corporate income tax rate of 6% and enjoys zero withholding tax on distributions..

    2. Luxembourg is also a great place to register an investment fund because:
      • Luxembourg is a popular domicile for registering European investment funds, as collective investment fund vehicles like SICAVs are legally exempt from all local taxes including corporation tax, capital gains tax and withholding tax;
      • There are no withholding taxes on interest, royalties or technical service fees paid to non-resident companies;
      • It will be easy to find qualified staff to provide financial services: Luxembourg boasts highly skilled labour and a dense network of financial services providers in the banking, finance and insurance industries.

    Disadvantages of Luxembourg company registration

      Luxembourg's business challenges
    1. Rightly or wrongly, Luxembourg is considered as a ‘tax haven’ by other EU member States. The European Union will continue to force the country to abandon legal tax exemptions on holding companies;
    2. Companies planning to have commercial or productive operations in Luxembourg require a business permit and must be managed by a resident director. Trading companies are also subject to a local corporate income tax rate of 21%.
  • Best uses for a Luxembourg company

    1. Luxembourg is a great place for the registration of a holding company. Such entities will benefit from reduced/waived corporate income tax on received dividends and will also have access to the country’s numerous double taxation avoidance agreements;
    2. Luxembourg is also a good place for the registration of a company providing insurance and financial services, provided our Clients are ready to comply with strict regulatory oversight by the Luxembourg Financial Markets Authority.

Contact us

For additional information on our company registration services in Luxembourg, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Olivia Stanciu, directly:
client relationship officer - Olivia