HOW TOSET UP A BUSINESSIN LUXEMBOURG

HOW TO SET UP A BUSINESSIN LUXEMBOURG

1.

BUSINESS PERMIT2.

LEGAL FORM

3.

IMMIGRATION

4.

TAXATION

5.

SETTLING DOWN6.

EDUCATIONIN LUXEMBOURG

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

1. BUSINESS PERMITAll businesses established in Luxembourg must acquire the necessary governmental permits. Commercial, skilled craft and industrial activities as well as certain liberal professions
are subject to a business permit.

COMMERCIAL ACTIVITIESOTHER REGULATED ACTIVITIESBusiness permits are issued by the Ministry of theEconomy for regular and lasting activities that fall within
the scope of the right of establishment. In order to carryout such activities in Luxembourg, applicants must fulfil certain conditions regarding their qualification andprofessional integrity and show that their business has
a fixed physical establishment here. The required professional qualifications depend on the nature of thebusiness and range from basic knowledge of company
management to specific professional qualifications anduniversity education.

Regulated activities require additional professional qualifications and authorisations. Financial institutions andfintech companies, for instance, are regulated by theCSSF (“Commission de Surveillance du Secteur Financier”). Companies whose activities can affect workers,
people in general and/or the environment require a
specific operating permit – commonly referred to as a“commodo/incommodo” permit. Other institutions, forexample the Ministry of Health and the Luxembourgish
Bar, also regulate some specific types of activities.

The most common business permit for commercial
activities concerns trade activities (wholesale, retail,provision of commercial services, services which areintellectual in nature and provided by a commercialcompany, and industrial activities). The Ministry of theEconomy also grants investment aids.

To finalise the creation of a business in Luxembourg,
the company needs to be registered at the Luxembourg
Business Register, at the Joint Social Security Centre andwith the tax authorities.

#1 highest labour productivity inthe world (GDP generated per hourworked)
Source: 2017 KOF Index of Globalisation#1 GDP performance in the world(GDP generated per hour worked)
Source: Statista, 2016

For further information, please contact:
House of EntrepreneurshipE-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

2. LEGAL FORM
Whatever the size and nature of their business, it is crucial for entrepreneurs to choose alegal form that suits their project (sole proprietorship or company).

SOLE PROPRIETORSHIP
Establishing a sole proprietorship entails setting up abusiness as a natural person instead of establishing aseparate legal entity. It involves more flexibility as wellas the the lowest number of administrative proceduresand fees for setting up, but also the highest risk as there
is no distinction between the entrepreneur’s private andcommercial property.

COMPANY
To lower the risk, many entrepreneurs choose to establish
a company that offers a strict separation between theirpersonal property and that of the company. In this case,the partners’ liability is limited to the amount of theircontributions. Capital companies also have an impersonal nature and rely chiefly on the capital provided by
the partners. The most common forms are the following:• A Public Limited Company (SA) is created throughthe drawing up of a notarised deed. A minimum capital of €30,000 has to be fully subscribed and paid up
to 25% (€7,500) at the incorporation. The SA form
facilitates the arrival of new shareholders as well as theaccess to capital markets.

• A Limited Liability Company (SARL) also has to becreated through the drawing up of a notarised deed.
A minimum capital of €12,000 has to be fully subscribed and paid at the time of the company constitution. An advantage of the SARL is that initial shareholders are granted a larger control of the ownershipof the shares as these cannot be traded freely.
• A Simplified Limited Liability Company (SARL-S)
can only be created by a natural person. The incorporation of the company may be effected by a private
deed. A minimum capital of between €1 and €12,000
has to be subscribed and paid up to a 100% at thecompany creation.
Other company forms exist but are not that frequent.
All sole proprietorships and companies have to be registered at the Luxembourg Business Register.

About 8,500 SA registered31.12.2017
Source: Statec, 2018

More than 18,000 SARL registered31.12.2017
Source: Statec, 2018

For further information, please contact:
House of Entrepreneurship
E-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

3. IMMIGRATION
Any third-country national (a person who is not an EEA national – i.e. from an EU Member
State, Iceland, Norway and Liechtenstein – or a Swiss Confederation national) planning tostay in Luxembourg for a period exceeding three months (90 days) must apply for a residence permit before entering the territory.
RESIDENCE PERMIT

After entering the country, the person concerned must:

An application for a residence permit must be sent to theImmigration Directorate of the Luxembourg Ministryof Foreign and European Affairs. The permit may berequested as an employee, a self-employed person, astudent, an intern, a researcher or a family member.

• make a declaration of arrival in the municipality where
he/she will be residing;

For stays that do not exceed three months, third-country
nationals are not entitled to carry out an activity as anemployee or a self-employed person, unless expressly
authorised to do so by the Minister. Third-country
nationals who wish to set up a business in Luxembourg
on a self-employed basis must fulfil various conditions.

• undergo a medical check;• submit proof of payment of the fee of €80.
After finalising these steps, the person will receive a letter
allowing him or her to pick up the final residence permit.

HOW DO I APPLY?
Before entering the country, the person concerned must:• submit the application to the Immigration Directorateof the Ministry of Foreign and European Affairs;• be in possession of a valid passport;
The person will then receive a temporary authorisation tostay. After receiving the temporary authorisation to stay,
he or she, if necessary, needs then to apply for a long term
visa (type D).

Luxembourg is:
3 rd most attractive city to move tofor work worldwide
Source: AIRINC, March 2017

Best place for expats to build
their careers
Source: Expat Insider Working abroad Index 2016

73% foreign citizens in the workforce
Source: Statec, May 2017

Most international country
in the EU
Source: Eurostat, 2015

For further information, please contact:
House of Entrepreneurship
E-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

4. TAXATIONThe Luxembourg government recently instigated a tax reform with three objectives: fairness, sustainability and competitiveness.

CORPORATE TAX LAW

SOCIAL SECURITY

The corporate income tax has been reduced over thepast years to 18% in 2018. In addition, there is a contribution to the employment fund and a communal businesstax that apply to corporate companies. Companies needto pay a net wealth tax based on the total of their balance
sheet and the financial items in the balance sheet.

Luxembourg’s social security system covers the risks ofillness, maternity, disability, death, age and accidents atwork and while travelling to and for work.

INTELLECTUAL PROPERTYThe new intellectual property taxation allows an exemption of 80% of the eligible income. The regime is basedon a nexus approach where expenditures have to bedirectly linked to the eligible asset and its relative income.
In general, patents and software protected by copyrightfall within the scope whereas trademarks are excluded.

All companies need to fill in an operating declaration anda declaration of start of employment to the Joint Social
Security Centre.
The social security contribution is 25% of the gross salary. A contribution of 16% of the gross salary is made to
the pension insurance. Half of this provision (included in
the total social security contribution) is covered by theemployer, while the other half is deduced directly fromthe salary of the employee.

PERSONAL INCOME TAX RATE
Luxembourg’s income tax rate for natural persons is oneof the lowest in Europe, particularly for couples. Income
tax is based on 23 tax brackets and the maximum marginal tax rate has been 42% since 2017.
Individuals’ tax burdens in Luxembourg depend upon
their income and the composition of their household.
According to the OECD, a married couple with two children and two salaries (100% and 67% of the average salary, respectively) will be taxed at a total rate – includingsocial security contributions – of 26%.

Extensive network of more than
80 active double tax treaties and over
20 in negotiation.
The standard VAT rate applicableto the provision of services in Luxembourg is of 17%, the lowest
rate in the European Union.

For further information, please contact:
House of Entrepreneurship
E-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

5. SETTLING DOWN
Luxembourg is an attractive place to live and offers an excellent work-life balance. Shortcommutes enable you to maintain a healthy and well-balanced family and social life.

FINDING ACCOMMODATIONA HOME FOR YOUR BUSINESSIn Luxembourg, a range of sources are available toprovide you with information regarding the real estatemarket. The Luxembourg housing observatory portal
provides information on property prices according tolocation, for both renting and purchasing. Numerous
websites, real estate agencies and relocation agencies
can help you find property.

In Luxembourg, there are many private office solutions
for your company.

RELOCATION AGENCIES
Relocation agencies can assist you with administrative
procedures and offer personalised advice and assistance to expatriates moving to Luxembourg. Their multilingual teams provide expatriates with logistical assistance and support in completing formalities in order tomake settling and integration in Luxembourg easier.

Plots of land and customised buildings are available forcompanies in industrial zones and business parks.
A number of public and private business incubators inLuxembourg provide office space to companies. Mostof them focus on sector-specific activities as well as on
innovation and technology. In order to be incubated,companies need to follow an application procedure thatgenerally involves the submission of a business plan,interviews and a final committee selection.

#18 for the quality of living
Source: Mercer Quality of Living Survey 2018

#1 among the safest cities in the world
Source: Mercer Quality of Living Survey 2016

2 nd least stressful city in the world
Source: Zipjet The 2017 Global Least and Most
Stressful Cities Ranking

For further information, please contact:
House of Entrepreneurship
E-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu

HOW TO SET UP A BUSINESS IN LUXEMBOURG - JULY 2018

6. EDUCATION IN LUXEMBOURG
Because of Luxembourg’s fast demographic growth and the fact that over 60% of pupils
attending school in Luxembourg are non-native, the offer of the school sector is constantly
growing all over the country in order to welcome more and more international pupils.

CHILDCAREChildcare is affordable, multilingual and accessible from
7am to 7pm and short commutes make parents’ lives easier. There are currently over 500 public and private nurseries in Luxembourg. Since 2017, 20 hours of day care
per week and per child are free of charge.

PRIMARY AND SECONDARY SCHOOL
Due to Luxembourg’s international labour force, a diversified and long-established offer is available in public(free of charge) and private schools where the International, European or French Baccalaureate, British A-levels, the German Abitur and the multilingual Luxembourgish Baccalaureate can be obtained.

• The Interdisciplinary Centre for Security, Reliabilityand Trust (SnT)• The Luxembourg Centre for Systems Biomedicine(LCSB)• Luxembourg Centre for Contemporary and Digital
History (C2DH)The University of Luxembourg has forged partnerships
with 60 universities worldwide and bachelor students
must spend at least one semester abroad. The university
also offers several cross-border or tri-national bachelor
and master degrees.
A number of foreign universities have also set up campuses in Luxembourg. Students from Luxembourg haveaccess to a wide range of universities all over Europe.

HIGHER EDUCATIONFounded in 2003, the University of Luxembourg is multilingual, international and research-oriented. The University has three faculties and three interdisciplinary centres:• The Faculty of Science, Technology and Communication (FSTC)• The Faculty of Law, Economics and Finance (FDEF)• The Faculty of Language and Literature, Humanities,
Arts and Education (FLSHASE)#1 for average number of languages
spoken by the population in an EU
country (3.6 languages)
Source: Eurobarometer

41% of the working population
has a higher education
7.12 researchers forevery 1,000 workers

For further information, please contact:
House of Entrepreneurship
E-mail: info@houseofentrepreneurship.lu
Phone: +352 42 39 39 330

www.tradeandinvest.lu
www.houseofentrepreneurship.lu
www.guichet.lu