Starting a business in Luxembourg involves a structured process, especially for foreign entrepreneurs, due to specific legal, regulatory, and tax requirements.
Here is a detailed guide on how to establish and operate a business in Luxembourg:
I. Pre-Establishment Phase
1. Develop a Business Plan
A comprehensive business plan is essential for structuring your project, securing funding, and obtaining your required permits.
2. Manage Immigration Requirements (Non-EU/EFTA Citizens)
If you are a national from outside the EU, Iceland, Norway, Liechtenstein, or Switzerland, you must generally secure a residence permit before entering Luxembourg to start your business, especially if your stay exceeds 90 days.
- Action: Apply for a temporary authorization to stay and then a residence permit for self-employed individuals with the Ministry of Foreign and European Affairs.
3. Choose a Legal Structure
The legal form determines your liability, capital requirements, and administrative complexity. The most common structures are:
| Legal Structure | Full Name | Min. Share Capital | Key Feature |
| SARL | Société à responsabilité limitée (Private Limited Liability Company) | €12,000 (fully paid up) | Most common for small to medium businesses; liability limited to contribution; 1 to 100 shareholders. |
| SA | Société Anonyme (Public Limited Company) | €30,000 (at least 25% paid up: €7,500) | Often for larger businesses; allows for public trading of shares; liability limited to contribution. |
| SARL-S | Société à responsabilité limitée simplifiée (Simplified LLC) | €1 to €12,000 (fully paid up) | For natural persons only; lower minimum capital, simpler incorporation. |
| Sole Proprietorship | Entreprise Individuelle | None | Unlimited personal liability for business debts. |
4. Verify and Reserve Company Name
Check the uniqueness of your desired name through the Luxembourg Trade and Companies Register (RCS) and reserve it.
II. Registration and Authorization Phase
5. Open a Corporate Bank Account and Deposit Capital
- Action: Open an account in a Luxembourg bank and deposit the required minimum share capital (for SARL and SA). The bank will issue a blocking certificate, which is mandatory for the notarization of the company statutes.
6. Obtain the Business Permit (Autorisation d’établissement)
Most commercial, craft, industrial activities, and certain liberal professions require a business permit from the Ministry of the Economy (General Directorate for Small and Medium-Sized Enterprises).
| Requirement | Description |
| Professional Integrity | Must demonstrate a clean criminal record and compliance with previous tax/business obligations. |
| Professional Qualification | Must provide proof of relevant qualifications or experience for the planned activity. |
| Physical Establishment | Must have a fixed physical establishment (e.g., office space) in Luxembourg suitable for the activity. |
| Effective Management | The business permit holder must ensure the effective and permanent management of the business and be physically present. |
| Application Process | Submit the application online via MyGuichet.lu or by postal mail. The application typically includes an application form, proof of payment of the fee (€50 or €24), criminal records, and a non-bankruptcy declaration. |
7. Notarize Company Documents
For most company forms (SA, SARL), a Luxembourg notary must draft and formalize the company statutes (articles of association) and the deed of incorporation.
- Action: The notary verifies the bank’s capital deposit certificate and the identities of the founders, and officially notarizes the incorporation deed.
8. Register with the Luxembourg Business Registers (LBR/RCS)
The notary usually handles the official filing of the notarized deed of incorporation and the articles of association with the LBR.
9. Register for Tax and Social Security
- Tax Authorities: Register with the Luxembourg Inland Revenue for Corporate Tax (CIT), Municipal Business Tax (MBT), and Net Wealth Tax (NWT). Register for VAT if your annual turnover exceeds €35,000.
- Social Security: Register the company and all employees with the Joint Social Security Centre (CCSS).
III. Legal & Tax Considerations
Key Taxes
| Tax | Description |
| Corporate Income Tax (CIT) | Levied on worldwide income of resident companies. The rate is being reduced from 17% to 16% in 2025. |
| Municipal Business Tax (MBT) | A local tax; the rate varies by municipality (e.g., 6.75% in Luxembourg City). |
| Value Added Tax (VAT) | The standard rate is 17%. Businesses are required to make periodic VAT filings. |
| Net Wealth Tax (NWT) | Levied annually on the net assets of a company. A simplified minimum NWT is applied based on the total balance sheet size (€535 to €4,815). |
International Tax Environment
- Double-Taxation Treaties: Luxembourg has a vast network of double-taxation treaties to prevent double taxation of income.
- Participation Exemption: Luxembourg has favorable rules that allow for the exemption of income (dividends, capital gains) derived from qualifying shareholdings, provided certain conditions (holding size and duration) are met.
- Transfer Pricing: Transactions between related parties must adhere to the arm’s-length principle (market-based pricing) and require proper documentation.
Ongoing Compliance
- Annual Accounts: Must be filed with the LBR.
- General Meetings: Shareholders’ meetings must be convened at least annually.
- Data Protection: Compliance with GDPR (General Data Protection Regulation) and local data protection laws is mandatory.