Luxembourg, a small yet economically vibrant country, is known for its favorable business environment, strategic location in Europe, and a robust legal and financial framework. Entrepreneurs from around the world are increasingly drawn to the Grand Duchy of Luxembourg for establishing their businesses. Even non-residents can easily set up a commercial company in Luxembourg, thanks to its business-friendly policies and efficient administrative procedures.
This guide will walk you through the essentials of establishing a commercial entity in Luxembourg, focusing on the necessary permits, common types of legal entities, corporate tax considerations, and the services provided by Damalion.
The Luxembourg Business Environment
Luxembourg offers a stable political environment, a well-established legal system, and a thriving financial sector, making it a prime destination for business ventures. It boasts a highly skilled multilingual workforce and is strategically positioned with excellent connectivity to major European cities. Additionally, Luxembourg‘s pro-business policies and modern infrastructure further enhance its appeal to international entrepreneurs.
The Business Permit: Autorisation d’établissement
To start a commercial activity in Luxembourg, obtaining a business permit, known as “autorisation d’établissement,” is mandatory. This permit ensures that the company meets all necessary legal requirements and is authorized to conduct business operations in the country. The autorisation d’établissement is issued by the Ministry of the Economy and applies to various commercial activities, including retail, services, and manufacturing. Non-resident entrepreneurs must appoint a local director to represent the company and fulfill legal requirements. At Damalion, we provide the option of a local director, as permitted by Luxembourg law, ensuring compliance and smooth operational start-up.
Legal Entity Types in Luxembourg
Several legal entity structures are available for entrepreneurs to choose from in Luxembourg. The most common types are:
- Société à Responsabilité Limitée (SARL): The Luxembourg SARL is a private limited liability company, a popular choice due to its flexible structure and limited liability protection. The minimum share capital requirement for a SARL is EUR 12,000. The capital must be fully subscribed and paid up at the time of incorporation.
- Société à Responsabilité Limitée Simplifiée (SARL-S): The Luxembourg SARL-S is a simplified version of the SARL, designed for small entrepreneurs and startups. It has a lower minimum share capital requirement of just EUR 1, making it more accessible for smaller businesses or those in the early stages of development.
- Société Anonyme (SA): The Luxembourg SA is a public limited company that suits larger enterprises looking to raise capital publicly. The minimum share capital requirement for an SA is EUR 30,000, which must be fully subscribed, and at least 25% must be paid up upon incorporation.
Corporate Income Tax
Luxembourg has a competitive tax regime, but corporate entities are subject to a corporate income tax rate of 24.94%. This rate includes the national corporate tax and municipal business tax, which may vary slightly depending on the municipality. Luxembourg also benefits from numerous double taxation treaties, reducing the tax burden for companies engaged in international trade.
Damalion’s Support for Non-Resident Entrepreneurs
At Damalion, we specialize in assisting non-resident entrepreneurs in setting up their businesses in Luxembourg. We offer a comprehensive suite of services, including the provision of a local director to comply with legal requirements. Additionally, we help streamline the process of opening a business bank account for your Luxembourg company, which is essential for managing finances and daily operations.
Luxembourg’s welcoming business environment, combined with Damalion’s expert guidance, makes establishing a commercial company as a non-resident a seamless and efficient process. Whether you are looking to tap into the European market or leverage Luxembourg’s strategic position, we are here to support your entrepreneurial journey from start to finish.
Damalion supports international entrepreneurs to setup their company in Luxembourg with business bank account. Please contact your Damalion expert now.
