Luxembourg is officially known as the “Grand Duchy of Luxembourg” which is a country that has literally developed around its capital city of the same name. Luxembourg is home to over half a million people. Bordered by France, Germany, and Belgium, the country is a founding member of the European Union and a member of all major international organizations.
Ideally situated at the heart of Europe and benefiting from a skilled multicultural and multilingual workforce, Luxembourg is a leading center for companies in both financial and non-financial industries.
Company registration in Luxembourg and starting a business in this jurisdiction is a relatively simple process.
The Joint Stock Company is also known as the SA (Société Anonyme or Public Limited Company). This type of company is one of the most common business structures in Luxembourg.
This type of company offers many advantages, especially in terms of limited liability and regulated access to capital. The liability is limited to the level of contribution of each shareholder. An SA is often chosen as a legal structure for large businesses, but it is also a very good option for small to medium-sized companies because it allows the use of bearer shares, being thus more easily transferable.
The minimum capital of a Joint Stock Company is EUR 31,000. The capital needs to be subscribed in full. Also, at least 25% of the nominal value of each share requires to be paid up. The share capital of a Public Limited Company can be contributed in the form of a non-cash contribution or in the combined form of a non-cash contribution and a cash contribution. Non-cash contributions are valued by an independent auditor.
The minimum number of shareholders is one and can be either an individual or a company. They can be either Luxembourg resident or non-resident and of any nationality
The shareholders are liable up to the level of their contributions to the share capital. The founders of a Joint Stock Company are jointly and severally liable towards third parties:
- for the capital not validly subscribed and for the difference between the minimum capital requirements and the amount of the subscriptions;
- for the effective payment of 25 % of the subscribed shares, and for the payment, within five years, of shares issued against contributions other than in cash;
- for the redress of damage arising from either the nullity of the company or the absence or non-conformity of statements in the company deed or object.
The world’s wealthiest country by GDP and one of the smallest in size, Luxembourg provides a unique low tax environment, which is why registering a company offers several advantages, especially for those businesses who want to expand their activity on the EU market.
Tax rates in Luxembourg:
- Corporation Tax in Luxembourg: 29.22% (commercial activity); 5.718% on intellectual property income, royalties.
- Income Tax in Luxembourg:43.6% (40% income tax + 9% solidarity surcharge calculated on the income tax)
- VAT Tax in Luxembourg: 17% (Reduced rates 3%, 8%, 14%)
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.