How to Register a Company in Luxembourg

Luxembourg is best known as Europe’s most powerful investment management center. The country is located in the heart of western Europe. It is considered as one of the world’s most business-friendly jurisdictions as there are no restrictions on foreign investment in Luxembourg. If you register a company in Luxembourg, you will enjoy a wide range of investment opportunities.

The economy of Luxembourg is greatly dependent on the banking, steel, and industrial sectors. The top exports of Luxembourg are iron blocks, rubber tires, cellulose fiber paper, cars, and iron sheet piling. These goods are exported mostly to most European countries such as Belgium, the Netherlands, Germany, Italy and France.

Company formation in Luxembourg is available to both foreigners and residents. For proper company registration, here are some guidelines.

Having the goal of the company you want to establish in mind, it is necessary to choose the appropriate legal structure that best suits the company’s activity. Different company structures each vary in their level of personal liability protection, tax effect, ownership and management flexibility.

Although there are different types of company structures, here are the three main types of legal structures applied in Luxembourg.

Special limited partnerships. It is very similar to limited partnerships found in other countries. It requires two people to form this structure. It comprises of two types of partners. The general partners who bear unlimited liability for the company and the limited partners who bear liability up to the minimum share capital. The limited partners are not obligated to manage the business.

Private limited company. This is one of the most common types of structure used in Luxembourg. It requires at least one director and one shareholder to set up. Its minimum share capital is €12,000. The shareholder enjoys limited liability, that is the company’s loss or gain will not exceed their deposited minimum share capital.

Public limited company. It’s also a commonly used structure by large companies in Luxembourg. It requires a minimum capital of €30,000. It also grants shareholders limited liability to the company’s gain and loss.

Before moving ahead with your company registration, you must have a reserved company name with the Trade and Company Register in Luxembourg. For your name to be reserved, it has to go through screening to check if it already exists and is been used by another company. If the name you choose is already in use, it will be discarded and you will have to prepare another name.

To avoid such errors, it is wise to have at least three distinctive names that are unique, meaningful, and give a clear insight to what kind of business you are going into. The company name should also be simple and short which helps in referral purposes and also helps for easy identification by your potential customers.

You can also choose to make use of abbreviations, symbols, alphabets and numbers when choosing a company name. If the name you have chosen is available, it will be reserved for you to use.

Companies undergoing registration must have a registered office address in Luxembourg. Without it, your company will not be incorporated. The company address can be registered at the address of either the company’s director or shareholder.

However, the desired place needs to have a warehouse, workspace, or office area in order to meet the business license requirements. The municipal regulations must allow professional activities to take place at that address.

The director and shareholder are required to provide the company with some basic information which includes names of all directors and shareholders, certified passport copies, proof of address, curriculum vitae, and bank references letter.

A registered office address will also be provided. The company address is necessary to maintain all corporate records, mails and tax information. Also the company is required to draft out its Articles of Association, Business Plan and Memorandum of Association which are required for company registration in Luxembourg.

Articles of Association is a document that gives a clear insight into the company’s purpose. It states the legal structure, duration of the company and other information regarding the company’s activity.

Memorandum of Association is a legal document that states the voting rights of the company, the rules and regulations governing the company, the share capital and so on.

However, it is required that the Articles of Association and other incorporation documents are translated into Luxembourg’s official language either German, French, or Luxembourgish.

Now it is time to proceed to file for company registration with the Trade and Companies Register. After all the required incorporation documents have been verified, the company will then be officially registered by the Trade and Companies Register. The registration process takes about two weeks to be completed.

After receiving approval, all incorporation documents are signed and sent to your company’s registered address.

This is done after your company has been successfully registered. It can be done at any local authorized bank in Luxembourg. Generally, it takes about four weeks to open a corporate bank account in Luxembourg. In most cases, the directors and shareholders are not required to travel if they are non-resident of Luxembourg. But if you are required to travel, you can appoint a nominee resident director to represent you at the bank.

Once your bank account is successfully opened, details of your bank token, and access codes will be sent to your company address.

Tax registration is mandatory after company registration has been approved. There are different types of tax registration approved in Luxembourg. They are:

Corporate tax. This tax is levied on resident companies and non-resident companies. Corporate tax is charged at 15% if the taxable income exceeds €175,000 and at 17% if the taxable income exceeds €200,000.

Business tax. It is levied only on the profits of commercial companies. It is applicable to only sole proprietors and partnerships making operating profits.

Value added tax. The standard rate for value added tax in Luxembourg is 17%. It is the lowest standard rate in the European Union. It is applicable to companies that sell goods and services to potential customers.

Without a doubt, registering a company in Luxembourg comes with a lot of benefits. Luxembourg’s strategic location that grants access to several European Union markets, skilled workforce, and business-friendly policies are what encourage potential business owners, who are looking forward to expanding their business footprint into the European market.