Being globally recognized as a dominant business hub, Luxembourg understands that development and innovation result from being open to new ideas and people. And due to this, it offers numerous opportunities for business owners looking to set up start-ups.
To support entrepreneurs further, its government and the private sector work together, and there is also a well-funded research, development, and innovation ecosystem available in Luxembourg.
What’s more, Luxembourg‘s business environment is varied, including several innovation niches, especially fintech, cleantech, and IT security. And Luxembourg‘s quickly becoming a center of excellence for new technologies, cybersecurity and data protection.
That said, setting up a startup in Luxembourg is beneficial, and it requires following a certain number of steps, which detail below:
Choice of legal form for your Luxembourg startup
Before authorizations, it is important to think about the legal form that best suits one’s activity and personal situation. This choice must be examined carefully, as the legal form will have a significant impact on the operation of the newly created structure and has several consequences, both in terms of assets and social and tax law.
The following types of legal forms are available for those enthusiastic about startups in Luxembourg:
- Sole Proprietorship: this form of business is mostly set up by a self-employed intellectual worker. The owners of sole proprietorship have unlimited liability and the business and the owner are considered one under the eyes of the law.
- Public Liability Company (Societe Anonyme/SA.): these entities are usually established by large businesses but are also available to SMEs since this setup deals in bearer shares that are easily transferable.
- Limited Liability Company (Société à Responsabilité Limitée/S.A.R.L.): most companies established in Luxembourg are incorporated in the form of S.A.R.Ls. These types of companies have integrated features of both capital companies and partnerships.
- The simplified company (SARL-S): in a bid to make entrepreneurship available to more people, Luxembourg created the SARL-S. SARL-S is similar to the classic SARL except that it requires lower share capital requirements.
Register head office
A registered office means a place in the Grand Duchy of Luxembourg where you are permitted to work. In Luxembourg, many startups move to incubators that offer not only office space but also programs that help them develop the project. One of the most famous incubators in the Grand Duchy is the House of Startups.
Obtain authorization/permit to start a business
All businesses established in Luxembourg must apply for necessary business permit.
There are the following conditions to be met by the entrepreneur to obtain authorization:
- Possess professional qualifications in line with the planned activity
- Provide a criminal record extract.
- Have an establishment in Luxembourg
- provide a declaration of non-bankruptcy that is verified by a notary to certify that he/she has never been subject to bankruptcy.
- Must comply with tax obligations
- Must provide a sworn statement regarding his/her business experience three years before sending the license application.
As a foreigner, the request for approval must be supported by his/her residence permit and sent to the Ministry of Immigration.
Other administrative procedures
Once the entrepreneur has gotten authorization, he/she must comply with various administrations to carry out business activities. These include registering with the following:
Joint Social Security Center (CCSS): the entrepreneur must be affiliated with the CCSS.
Duties and VAT authority: to be able to issue invoices, the entrepreneur must apply to the Administration of Registration and Domains (AED) to acquire his/her VAT number.
Also, the entrepreneur must have the start-up registered at the level of the administration of direct contributions to be taxed.
Ready to establish your business in Luxembourg, let’s go ahead and contact your Damalion experts now.
