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LUXEMBOURG
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Luxembourg with efficiency and assurance.
WHY LUXEMBOURG ?
Amongst all the countries in Europe, Luxembourg, officially the Grand Duchy of Luxembourg, is a small, landlocked country located in Western Europe. It is known for its role as a major financial hub, particularly in investment funds and private banking, as well as its strategic location at the heart of Europe. Despite its small size, Luxembourg is one of the wealthiest countries globally. The capital of Luxembourg is Luxembourg City, which is also its largest and most populous city, serving as the country’s primary economic, administrative, and cultural centre, home to numerous EU institutions. According to the World Bank, Luxembourg is classified as a High-Income Economy, boasting one of the highest GDP per capita figures in the world, driven by its sophisticated financial services sector and diverse economy.
The currency of Luxembourg is the Euro (EUR), which it adopted from its inception.The population of Luxembourg is estimated to be around 670,000 in 2024. Its neighbouring countries are Belgium to the west, France to the south, and Germany to the east. The official languages of the country are Luxembourgish, French, and German, with English also widely spoken, especially in the business and financial sectors. Currently, Luxembourg has one major international airport, Luxembourg Airport (LUX), which is well-connected to major European cities and serves as a significant cargo hub.
Establishing a business in Luxembourg is highly efficient, transparent, and benefits from its robust legal framework and strong regulatory environment, aligned with EU standards. A foreign investor who is planning to start his business in Luxembourg can form various company types, such as a Société à ResponsabilitéLimitée (S.àr.l. – Private Limited Company), a Société Anonyme (S.A. – Public Limited Company), or a Branch Office. A Société à ResponsabilitéLimitée (S.àr.l.) is the most common and flexible form, allowing 100% foreign ownership and requiring a minimum share capital of EUR 12,000. Luxembourg’s sophisticated legal framework supports complex cross-border structures, making it highly attractive for international holding companies and investment vehicles.
ADVANTAGES
Stable Political and Economic Environment:
As a AAA-rated country with low government debt, it offers a secure, stable, and transparent environment for long-term investment.
Attractive Tax Regime:
Features include a relatively low corporate tax rate (17% + municipal business tax), extensive double taxation treaties, and IP box incentives.
Strategic Location and EU Access:
Situated in the heart of Europe, it provides easy access to a market of over 450 million consumers.
Highly Skilled, Multilingual Workforce:
A diverse, international, and productive talent pool with high proficiency in English, French, and German.
Business-Friendly Regulatory Framework:
Fast, streamlined company registrationand accessible government officials.
Financial and Innovation Hub:
A global leader in investment funds and banking, with a thriving ecosystem for fintech, cybersecurity, and space technologies.
Startup Support:
Extensive support including, House of Startups, Luxembourg Future Fund, and grants.
TAX REGIME
Personal Income Tax (PIT)
- Progressive Rates: Ranges from 0% up to 42% for high earners (e.g., over €234,870 in 2025).
- Tax Classes: Different classes (1, 1a, 2) exist for single, married, widowed, and single-parent households, affecting tax calculation.
- Solidarity Surcharge: An additional charge (7-9%) on income tax, depending on income level, for the Employment Fund.
- Taxation Basis: Residents are taxed on worldwide income; non-residents on Luxembourg-source income.
Corporate Tax (CIT)
- Combined Rate: Around 23.87% in Luxembourg City, combining a 16% corporate tax with municipal business tax (MBT).
- MBT: Varies by municipality (6.75%-12%).
- Solidarity Surcharge: A 7% surcharge on the CIT portion.
- Worldwide Income: Resident companies taxed on global income.
Other Key Taxes & Features
- VAT (IVA): Standard rate is 17%; reduced rates (14%, 8%, 3%) apply to certain goods/services.
- Social Contributions: Mandatory deductions for social security.
- Special Regimes: Favourable schemes for expatriates (e.g., 50% exemption on remuneration up to €400k for eligible inpatriates from 2025).
- Double Taxation Treaties: Extensive network to prevent double taxation.
LUXEMBOURG COMPANIES
Private Limited Liability Company (Société à responsabilitélimitée – S.àr.l.):
The most popular choice (approx. 66% of companies), ideal for small to medium enterprises. It requires a minimum capital of €12,000 and provides limited liability for shareholders.
Public Limited Company (Société anonyme – S.A.):
Generally used by large businesses, it requires a minimum share capital of €30,000. It is suitable for large-scale operations and allows for the free transfer of shares.
Simplified Limited Liability Company (Société à responsabilitélimitéesimplifiée – S.àr.l.-S):
Known as the “1 Euro” company, this is a simplified version of the S.àr.l. designed for entrepreneurs with low capital.
Partnerships (SENC/SCS/SCSp):
- General Partnership (Société en nom collectif – SENC): Partners have unlimited liability.
- Simple Limited Partnership (Société encommandite simple – SCS): Combines partners with unlimited liability and limited partners.
- Special Limited Partnership (Société encommanditespéciale – SCSp): A flexible structure widely used for investment funds.
Partnership Limited by Shares (Société encommandite par actions – SCA):
A hybrid entity that acts as a partnership but issues shares, often used in specific investment structures.
European Company (Societas Europaea – SE):
A public company registered under European law, enabling operations across the EU.
Sole Proprietorship (Entrepriseindividuelle):
A business owned and run by one individual, with no legal distinction between the owner and the business.
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Contact Us
Get in touch with the right people to get the right help in setting up your business in Luxembourg.
enquiries@chandrawatpartners.com.