Select Page

France entrepreneurs choose Luxembourg: setting up SARL, SARL-S, and SA companies

by | Sep 3, 2024 | Corporate Structuring, Entrepreneurship

Why French Entrepreneurs Are Moving to Luxembourg to Escape High Taxes

In recent years, many France entrepreneurs have looked to Luxembourg to set up their businesses, attracted by the country’s business-friendly environment and strategic advantages. Luxembourg’s efficient legal framework, favorable tax laws, and stable economy make it a compelling choice for French clients. At Damalion, we specialize in helping French entrepreneurs create Luxembourg companies, guiding them through the process of obtaining business permits and opening business bank accounts.

From France to Luxembourg: supporting Entrepreneur’s ambition

French entrepreneurs face significant fiscal pressure due to a combination of high taxes and complex regulatory requirements. Corporate tax rates in France are among the highest in Europe, with a standard rate of 25% in 2024, alongside additional social contributions and payroll taxes. This tax burden increases the cost of doing business and can deter investment and expansion, particularly for France small and medium-sized enterprises (SMEs). Additionally, the French tax system‘s complexity adds to the fiscal pressure, requiring entrepreneurs to navigate a labyrinth of rules and regulations, which can lead to increased administrative costs and the need for specialized tax advisory services. This environment can be stifling for French startups and growing businesses, as it reduces profit margins and limits the availability of capital for reinvestment.

From Paris to Luxembourg, French entrepreneurs see the benefits of different types of Luxembourg commercial companies, such as the SARL, SARL-S, and SA, and how Damalion can facilitate the process.

1. Understanding the types of Luxembourg companies

French entrepreneurs can choose from various legal forms when setting up a business in Luxembourg. The three most popular types of companies are:

  • Société à Responsabilité Limitée (SARL): SARL is the equivalent of a private limited liability company. It is the most common type of business structure in Luxembourg, particularly favored by small and medium-sized enterprises (SMEs). To set up a SARL, the minimum share capital required is €12,000, which must be fully paid up at the time of incorporation. SARLs can have between 2 and 100 shareholders, and the liability of each shareholder is limited to the amount of their investment.
  • Société à Responsabilité Limitée Simplifiée (SARL-S): The SARL-S is a simplified version of the SARL, designed specifically for individual entrepreneurs and small businesses. Sarl-S requires a minimum share capital of only €1, making it an accessible option for start-ups and small enterprises. This low capital requirement allows entrepreneurs to establish a Sarl-s company with limited financial resources while still enjoying the benefits of limited liability.
  • Société Anonyme (SA): The SA is a type of public limited company suitable for larger businesses that may want to attract significant investments or consider going public in the future. The minimum share capital required for an SA is €30,000, which must be subscribed by at least one shareholder and paid up to the extent of at least 25% at the time of incorporation. SAs offer more flexibility in terms of corporate governance and share transferability compared to SARLs.

2. Benefits of Luxembourg companies for French entrepreneurs

Luxembourg offers several advantages that are particularly attractive to French entrepreneurs:

  • Favorable Tax Regime: Luxembourg has a competitive corporate tax rate and offers various tax incentives, such as the participation exemption regime, which allows companies to receive dividends and capital gains from their subsidiaries without incurring additional taxes.
  • Strategic Location and Market Access: Situated at the heart of Europe, Luxembourg provides easy access to the European market, facilitating cross-border trade and operations.
  • Stable Legal and Regulatory Environment: Luxembourg boasts a well-established legal system that provides certainty and protection for businesses. Its regulatory framework is business-friendly, ensuring that companies can operate smoothly.

3. Damalion’s role in facilitating company formation

At Damalion, we assist French entrepreneurs in every step of setting up their Luxembourg companies. Our services include:

  • Company Formation: We help entrepreneurs choose the right type of company (SARL, SARL-S, SA) based on their business goals and provide guidance on meeting share capital requirements.
  • Obtaining Business Permits: We guide clients through the process of obtaining the necessary business permits to operate legally in Luxembourg, ensuring compliance with local regulations.
  • Opening Business Bank Accounts: We facilitate the opening of business bank accounts in Luxembourg, which is crucial for managing finances and conducting transactions.

Luxembourg’s advantageous business environment makes it an attractive destination for French entrepreneurs. With Damalion’s expertise, setting up a SARL, SARL-S, or SA in Luxembourg becomes a straightforward process. We provide comprehensive support, from company formation and securing business permits to opening business bank accounts, ensuring that French entrepreneurs can successfully establish and grow their businesses in Luxembourg.

Damalion supports France entrepreneurs to setup their Luxembourg company with business bank account. Please contact your Damalion expert now.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.