The world’s wealthiest country by GDP and one of the smallest in size, Luxembourg provides a unique low-tax environment for international investors. It is also a founder member of the EU, a fact that sits oddly with its status as a tax haven.
The country is widely used in corporate structuring for cross border transactions, but due to its place in Europe’s political environment it is constantly adapting its tax legislation, to avoid adverse conflict with the tax authorities of other EU countries.
Due to its progressive and adaptive approach, Luxembourg is, and will remain, a beneficial country for international business structuring. As a result, Luxembourg’s tax laws frequently come under scrutiny from other EU states and are prone to change.
In order to fully capitalise on the many advantages of Luxembourg incorporation, talk to us about our range of Luxembourg company formation services, bank accounts and everything else you need to know about establishing a company in Luxembourg. We will steer you safely through Luxembourg’s complex tax regulations.
A summary of Luxembourg Corporate Taxes is available here.
Is Luxembourg a low-tax environment for everyone?
Not at all – the tax benefits in Luxembourg are carefully structured to ensure minimal disruption with other EU countries. In many ways it is a high-tax country – Corporate Income Tax is 28%, individual tax rates are higher and there’s a Wealth Tax on top of this.
On the face of it, the corporate structure in Luxembourg is similar to that of most other EU states, with most companies adopting the usual Joint Stock or Limited Liability formats. However within this standard structure is a strictly-defined class of holding company.
If you qualify for this Corporate Income Tax can sink to below 1%. For expert advice, we can put you in touch with one of our specialists in tax planning.
What are the main types of company available in Luxembourg
These are the main forms of business entity for company registration Luxembourg:
– Public Limited Liability Company (S.A.): the minimum amount of share capital is €30,000 (of which 1/4 must be paid in), requirements include a minimum of one director, a registered office in Luxembourg, and may require audited accounts if the company exceeds a certain criteria.
– Private Limited Liability Company (S.à r.l.): the minimum amount of share capital is €12,000, there must be no more than 40 shareholders, and requirements include at least one director, a registered office in Luxembourg, but is general exempt from audit.
Other forms of Luxembourg company include:
– Small Private Limited Liability Company
– General Partnership
– Limited Partnership-
– Branch of foreign company
Are there low-tax options available in Luxembourg?
The most used type of company in Luxembourg is a SOPARFI. In fact, it would be more accurate to define a SOPARFI as tax-efficient rather than low-tax.
The rules governing low-tax holding companies are strict and it is essential that you comply with them at all times, otherwise your company may lose its low-tax status.
SOPARFI’s also have access to all double-tax treaties and benefit from low or no tax rates on dividends.
Please contact us to discuss your requirements in detail.
How easy is it to recruit staff in Luxembourg?
The unemployment rate in Luxembourg is low and businesses have little trouble recruiting staff as the labour pool is bolstered by workers commuting into Luxembourg from neighbouring countries.
The workforce is well educated and is particularly attuned to the financial services sector.
Please contact us to discuss your recruitment requirements.
What is the regulatory environment like in Luxembourg?
Luxembourg is regarded as rather more bureaucratic than some other EU member states.
It complies with EU directives on labour, health and safety etc, and indeed on most taxation issues, apart from the particular circumstances of low-tax holding companies.
Domestic and foreign investors alike have the right to establish business enterprises in Luxembourg.
Are there financial incentives available in Luxembourg?
In addition to being a tax haven, which is a considerable financial incentive in itself, Luxembourg has a number of schemes designed to promote investment.
It has established a framework for investment incentives to counter the country’s historic reliance on the steel sector, and grants are available to encourage investment in other manufacturing and high-tech industries.
The government also provides equity funding for certain kinds of investment, particularly in development areas.
How easy is it to close a Luxembourg company?
Please contact us in order to discuss closing your company in Luxembourg.
What about banking facilities in Luxembourg?
Luxembourg is a major centre for financial services, and there are more than 200 banks in a country whose population is below half a million. No surprise, then, that Luxembourg offers world-class banking facilities.
For assistance with opening a bank account in Luxembourg, please contact us.