Frequently Asked Questions

This section is designed to provide information on setting up a business in Luxembourg. It is structured as a list of Frequently Asked Questions and covers how to get a business permit, the different types of legal entity that can be established and taxation. Links and phone numbers are given for the various organizations that can be contacted for further information.

The information is for general guidance only. While we have made every attempt to ensure that it is accurate, the British Chamber of Commerce is not responsible for any errors or omissions, or for the results obtained from the use of this information. The information is up to date at January 2010. Users are advised to check current legislation for changes since that date.

The right to set up in industry, commerce, certain professions (itemised below) and skilled craft trades is regulated by the Law of 28 December 1988. Full details and assistance with co-ordinating and preparing your applications are available from the Luxembourg Chamber of Commerce department Espace Entreprises. Tel: 42 39 39 330. Email: enterprises@cc.lu. They publish many relevant brochures in English, including How To Get a Business Permit in Luxembourg, and a DVD Doing Business in Luxembourg, containing a wealth of information and two videos, from which online updates can be made. They can also advise on financing and government aid and the appropriate legal form of company. For skilled craft trades contact the Chamber of Skilled Crafts (Formalités). Tel: 42 67 67-229. Email centre.de.formalites@cdm.lu.

Other useful websites are: businessplan.lu , which has a series of interactive forms in French (Formulaire unique) of the administrative steps to set up a business; the Portail Entreprises, a business portal in French, which you can navigate by stage of development of your business (creation etc.), by functions (tax etc.) and by subject (government aid etc.); and le guichet.org., which summarises in English the steps to take to set up a business and includes information on the tax system and setting up a bank account.

There are separate special requirements for the financial sector and the insurance and reinsurance sector.

Whether you want to set up in business as an individual or as a company you will require a business permit. Some of the specified professions for which you require a permit (see below) also need additional authorisations: for example, auditors need the authorisation of the Ministry of Justice (Professions/ réviseurs d'entreprises). Tel: 478-4546.

Within one month of setting up your business you must register it in the business register (see exception for professions below). Tel: 26 428-1.

You must also become a member of the Luxembourg Chamber of Commerce or Chamber of Skilled Crafts (see exception for professions below). This is done automatically by the tax authorities notifying the relevant chamber.

The professions for which you require a business permit described above are: architects, consultant engineers, 'qualified accountants' (chartered accountants/ experts comptables), 'simple accountants' (comptables), patent and trademark consultants, economic consultants, auditors and pharmacists. If you set up in these businesses as an individual, as opposed to a company, you do not have to register in the business register or be a member of the Luxembourg Chamber of Commerce.

You will also need to register for income tax, value added tax and social security.

For more information on government support for innovation as well as on setting up in business generally see the Luxembourg Portal for Innovation and Research (in English). Tel: 43 62 63-1.

For those interested in buying or selling an existing business the Luxembourg Chamber of Commerce department Bourse d'entreprises operates a business exchange forum, Tel: 42 39 39 331.

For more information on the advantages of doing business in Luxembourg see Luxembourg for Business, Luxembourg for Finance and the dedicated PricewaterhouseCoopers website on this subject.

The permit is obtainable from the Ministry of Middle Classes, Tourism and Housing. Tel: 478-47150. Among other things, you will need evidence of professional qualification and evidence of good standing.. (Except for the construction industry, no qualification is required for industrial activity: the issuing of a permit is dependant on a positive response from the Ministry of Economy.)

Under the Law of 27 September 2004, which came into effect on 11 August 2004, for applicants seeking to set up in commerce one permit covers all commercial activities (replacing the permits for specific trades). For this, you need to provide evidence of managerial qualifications (e.g. an MBA degree) or, failing that, managerial experience. For a transition period of three years to 10 August 2007, applicants who could have applied under the old regulations governing specific trades can still do so but they will receive a permit for general trade. \'Simple accountants\' (as opposed to \'qualified accountants\') already practising at 11 August 2004 (for which no permit was required) need to show evidence of specific qualifications and experience.

The documents supporting your application will need to be translated into French or German by an approved translator. It normally takes about three months for the permit to be issued. Once you have the permit, the nature of your business and the permit number must appear on your business stationery.

This depends on the occupation but is usually a certificate, university degree or other diploma supported by practical experience, or managerial experience. In some cases practical experience may be substituted by passing one of the Luxembourg Chamber of Commerce accelerated courses. You will need to supply an authenticated copy of your certificate, degree or diploma. You may also need to have your certificate, degree or diploma recognised in Luxembourg. Non-residents will need to supply an EU certificate (No. 82, from the Official Journal of the European Community) relating to their occupation in their country of origin issued by a chamber of commerce, chamber of skilled craft trades or government department. For British residents this is obtainable from the National Academic Recognition Centre (Tel: +44 870 990 4088). For residents in Luxembourg , evidence of membership of a Luxembourg social security scheme constitutes a certificate of work experience.

For foreigners resident in Luxembourg for five years or more, the Ministry of Middle Classes will seek a certificate from the courts. Those resident for less than five years must supply a certificate of good standing in the form of an extract from the police record, a recent certificate of solvency for an indefinite period or a sworn declaration of non-bankruptcy made before a notary or (in English law countries) an affidavit. For companies, the Articles of Incorporation (published or draft) must also be supplied.

You can have a copy authenticated at your town hall or the Centre Emile Hamilius in Luxembourg City. Tel: 4796-2200.

If this is required, the Ministry of Middle Classes (Tel: 478-4715) will tell you who to apply to. For a higher education degree, for example, you need to have the certificate registered by the Ministry of Culture, Higher Education and Research. Tel: 47 8-5134.

Banks and other professionals of the financial sector (PFS) need to obtain a license from the Ministry of Treasury and Budget. The Financial Sector Supervisory Commission (CSSF) is responsible for the preliminary analysis of applications for approval. Tel: 26 25 1-209.

The main conditions for banks are:

• The legal form of the establishment
• The central administration and infrastructure (administrative and accounting organisation, internal control procedures)
• The quality and structure of the shareholders
• The repute of the members of the management and supervisory boards, administration bodies and shareholders
• The professional experience of those in charge of day-to-day management
• The financial resources
• Adequate creditworthiness
• Membership of a deposit guarantee scheme or an investor protection scheme

Other PFS are divided into:

• Investment firms (e.g. commission agents and private portfolio managers)
• Certain other PFS other than investment firms (e.g. financial advisors, brokers and market makers)
• Other PFS

The conditions for other PFS are almost the same as for banks, the main difference being that the minimum capital requirements are lower.

To qualify for a license, banks and other PFS must normally be a legal entity.

A bank or investment firm approved and supervised by the authorities of another EU Member State may set up a branch office or offer services in Luxembourg without the approval of the Luxembourg authorities provided that the services are covered by its own home-country approval.

For further information (in English) on setting up a business in the financial sector see Luxembourg for Finance.

In Luxembourg the main legislation governing companies is the law of 10 August 1915 as subsequently amended.

Below is a summary of the types of legal entity and how to establish a company. Full details are available in the publication (in English) Doing Business in Luxembourg, available on the Luxembourg Chamber of Commerce website. Further information can be obtained from the Luxembourg Chamber of Commerce department Espace Entreprises. Tel: 42 39 39 330. Email: enterprises@cc.lu.

a) General characteristics b) Registered seat c) Costs d) Other types of companies e) Specific tax efficient vehicles f)  Branches

a) General characteristics

Luxembourg law recognises seven different types of commercial company, six of which are detailed in the table; a seventh recently introduced.

These are as follows, together with their approximate equivalents in English or US law.

• Société anonyme (S.A.) - public limited company. (There is also a public limted company with a sole shareholder, which is subject to the same rules.)
• Société à responsabilité limitée (S.à r.l.) - private limited company. There is also a single-member S.à r.l., which is subject mainly to the same rules.
• Société en commandité par actions (S.e.c.a.) - a partnership limited by shares
• Société en nom collectif (S.e.n.c.) - general partnership
• Société en commandité simple (S.e.c.s.) - limited partnership
• Société co-operative (S.C.) - co-operative. Note - A new kind of co-operative, 'a co-operative organised as a public company', was introduced by the law of 10 June 1999. It is governed by the regulations relating to co-operatives and to public companies, except for the adaptations provided for in that law.
• Société européenne (S.E.) - A new kind of commercial company which was introduced by the law of 25 August 2006. It is a société anonyme incorporated in conformity with article 2 of European Council regulation (CE) no. 2157/2001 dated 8 October 2001 on the articles of incorporation for a European company.

The first three types of company and the last listed above ('capital companies') are required to be incorporated with a minimum share capital fixed at the equivalent of EUR 30,986.69 for a S.A. and a S.e.c.a, of which at least a quarter must be fully paid up at the date the company is formed. The minimum share capital for an S.E. is set at the equivalent of EUR 120,000.

The minimum share capital for a S.à r. l. is fixed at the equivalent of EUR 12,394.68 and has to be fully paid up.

The capital may be expressed in any currency. A S.à r.l. may not raise capital from the public.

The other types of company can be implemented with no specific requirement regarding the minimum share capital to be subscribed. The founders are free to arrange their contribution to the company.

'Capital companies', as opposed to the entities defined as 'person companies', are separate entities for tax purposes and subject to taxation in their own right.

'Person companies' are transparent for tax purposes and the members are taxed on their share of income.

Other considerations include the extent of the members' liabilities, the transferability of shares and accounting requirements.

All these types of company require Articles of Incorporation, similar to the Articles and Memorandum of Association of a UK company.

The incorporation of a S.A., a S.à r.l., a S.e.c.a or a S.E. requires the signature of a notarial deed. Companies of the other types can be incorporated either by a notarial deed or by private seal.

The deed must be registered with the Administration de l'Enregistrement et des Domaines (Tel: 44 905-1). The articles of incorporation and the names, date and place of birth, professional occupation and address of the directors or managers must be registered with the Luxembourg Business Register (Tel: 26 428-1) and published in the official journal of Luxembourg (Mémorial du Grand-Duché, Recueil Spécial des Sociétés et des Associations).

The company acquires its legal status and existence at the date of the signature of the incorporation deed and not at the date of the publication of the articles of association in the Mémorial, except for the S.E., which acquires legal personality once registered with the Luxembourg Business Register.

These documents must be in French or German. However, any document can also be prepared in English, but in this case a translation into French or German of the English text is required. In case of any divergence between the English and the French or German text, the French or German version will prevail, except if the parties agree that the English version will prevail.

b) Registered seat

The company must have a registered seat in Luxembourg.

This can be an address provided by a domiciliation agent in Luxembourg.

Under the law of 31 May 1999 regulating the domiciliation activity only a member of one of the following regulated professions, established in Luxembourg, may act as a domiciliation agent: credit institution or other professional of the financial sector or insurance sector, lawyer, independent auditor, qualified accountant.

Article 28-1 of the law of May 31, 1999 lays down the conditions for being a domiciliation agent. This article has to be combined with the article 1 of the same law. Consequently anyone who exercises the above functions must obtain qualification as an 'other professional of the financial sector'. This will require regulatory approval and proof that the individual holds or the company is managed by an individual holding a university degree in law, economics or management and that there is capital of a minimum equivalent to EUR 371,840.29.

Article 28-1 is only an amendment to the law of April 5, 1993 concerning the financial sector in Luxembourg, which gives an additional definition of the domiciliation activity.

c) Costs

The main costs of establishing a company are:

• Notary's fees according to a scale laid down by law. (For detail see Doing Business in Luxembourg on the Luxembourg Chamber of Commerce website.)
• Registration duty (fixed rate of EUR 75;  capital duty at 0.5 per cent of nominal capital, plus share premium, if any, was abolished with effect January 1, 2009).
• The registrar's fee for registration in the trade register and the costs of publication in the Mémorial.
• Other legal and consultancy fees.

d) Other types of companies

Other forms of association recognised by Luxembourg law are:

• Economic Interest Group and European Economic Interest Group (GIE and EEIG). Formed with the exclusive aim of facilitating or developing the economic activity of its members, and improving or enhancing the results of that activity.
• Civil (non-commercial) company (Société civile). Particularly suited to joint practices in the independent professions and to the management of real estate.
• Joint venture (Association momentanée). Formed for the specific purpose of carrying out specified commercial operations.
• Silent partnership (Association en participation), a contract between two or more persons for combining their money, goods, labour, and skill, or any or all of them, under an understanding that there shall be a communion of profit between them, and for the purpose of carrying on a business.
• Non-profit making association (A.S.B.L.)
• Branch

e) Specific tax efficient vehicles

Luxembourg provides a number of tax efficient vehicles for holding investments and/or organizing financing activities.

There are both taxable (SoParFi) and non-taxable forms, with respect to income and capital gains taxation.

I. Non-taxable entities

I.I Non-taxable holding companies were previously constituted under and regulated by the law of July 31, 1929 (companies known as 1929 Holding Companies) and were defined by their corporate purposes and not by their form.

Their activities were restricted to holding, managing and developing participations.

 

The major advantage of the 1929 Holding Company regime was that these companies were exempt from income tax, net worth tax and withholding tax on dividends distributed and were only subject to the following:

• Capital duty of 1% of the net invested,
• Annual tax of 0.2% on effective capital (taxe d'abonnement).

One major limitation on their use was that they did not qualify under double taxation treaties or under the EU Parent Subsidiary Directive as normally taxable companies.

 

This tax regime was abolished at the end of 2006 and existing 1929 Holding companies were granted a transitional period until the end of 2010.

 

 

I.2. The Personal Investment Company, Société de Gestion de Patrimoine Familial (SPF or Sogepaf) is a new passive private wealth investment vehicle.

 

The SPF, introduced by the law of April 26, 2007, takes one of the existing forms of a S.A., S.à r.l., S.e.c.a. or S.C. organized as a S.A., but benefits from a special tax regime, subject to restrictions mainly on its activities and on who may be its shareholders.

 

The SPF’s activities are restricted to acquiring, holding, managing and disposing of “financial assets”. All commercial activities, the granting of interest bearing loans and the provision of any kind of remunerated services are forbidden and the SPF may not have a role in the management of companies in which it holds shares.

 

Unlike the 1929 Holding Company, the SPF’s shareholders must be individuals, private wealth vehicles or intermediaries acting on behalf of individuals or private wealth vehicles.

 

The major advantage of the SPF is that these companies are exempt from income tax, net worth tax and withholding tax on dividends distributed, and are only subject to the following:

• Registration duty at the fixed rate of EUR 75 (capital duty of  0.5% of the capital raised was abolished with effect January 1, 2009).
• Annual subscription tax of 0.25% of paid-up capital, share premium and debt in excess of 8 times the sum of the former (taxe d'abonnement), capped at EUR 125,000.

A disadvantage is that the SPF is unlikely to benefit from tax treaties.

 

 

I.3. The Specialised Investment Fund (SIF, Fonds d’Investissement Spécialisé, FIS) is a tax-exempt lightly regulated investment fund reserved for “informed investors”.

 

 The SIF takes one of the forms available to fully regulated investment funds, i.e. a sicav or sicaf, having the legal form of a S.A., S.à r.l., S.e.c.a. or S.C. organized as a S.A.; or a fcp (fonds commun de placement).  It is however more lightly regulated, for example in terms of reporting requirements and restrictions on its investments and leverage. It must apply risk diversification and can be divided into sub-funds. The SIF must have net assets of at least EUR 1,250,000.

 

A major advantage of the SIF is that it is exempt from income tax, net worth tax and dividend withholding tax on dividends distributed, and is only subject to the following:

• Registration duty at the fixed rate of EUR 75 upon creation and certain subsequent capital increases or reorganizations (capital duty of EUR 1250 was abolished with effect January 1, 2009),
• Annual subscription tax of 0.01% of net asset value (payable on a quarterly basis).

A SIF may be in the scope of the Luxembourg law implementing the EU Savings Directive, but only if it is a fcp, and this will then depend on its investment policy.

 

A SIF is eligible for benefits under certain tax treaties signed by Luxembourg but excluded from others.

 

One limitation on the use of SIFs is that they do not qualify under the EU Parent Subsidiary Directive as normally taxable companies.

 

II. Taxable holding companies are known as SoParFi (Sociétés de Participations Financières)

The SoParFi, which is fully taxable like any other entity, takes advantage of tax legislation available to all companies (principally double tax treaties and benefits under the EU Parent Subsidiary Directive) and does not have any restrictions on the scope of its activities.

f) Branches

A non-resident company can establish a branch in Luxembourg.

The branch does not have separate legal personality from the company's registered office (or head office). It is, however, subject to the same registration and publication requirements as a company incorporated in Luxembourg.

This means that the following acts and documents must be registered with the Trade Register and published in the Mémorial:

 

• Address of the branch
• Activity of the branch
• Name and form of the parent company
• Name and occupation of the persons authorised to act on behalf of the company, either as member of the management board or as permanent representative of the Company for the activity of the branch.

Prior to the deposit all these documents must be authenticated in the country of origin and in Luxembourg.

Special rules may, however, apply to branches of the business registered elsewhere in the EU. For example, additional information must be registered and published, such as:

• Indication of the law of the state by which the company is governed
• The articles of association of the company
• The legal form of the company, its registered office, its object, and at least annually the amount of subscribed capital

Registration duty of EUR 75 (in lieu of Capital duty of 0.5% of capital invested in the branch, which was abolished with effect January 1, 2009) is payable except where the company's registered office is elsewhere in the EU, in which case no duty is payable.

a) Individuals

• Income tax (impôt sur le revenu des personnes physiques)
• Social security (sécurité sociale)
• Investment income
• Capital gains
• Wealth tax (impôt sur la fortune)

b) Companies

• Corporate tax (impôt sur le revenu des collectivités)
• Municipal business tax (impôt commercial communal)
• Capital gains for corporations
• Participation exemption (le Régime mère-fille) - dividends and capital gains
• Wealth tax (impôt sur la fortune)
• Withholding tax (Retenue d'impôt à la source)
• Capital registration duty ('droit d'apport')
• Investment tax credit (bonification d'impôt pour investissement)
• Value added tax (TVA)

a) Individuals

Income tax (impôt sur le revenu des personnes physiques) Residents are taxable on their worldwide income in 'banded' rates up to a top marginal rate of 38.95 % on taxable income in excess of EUR 39,885 for a single person and EUR 79,770 for a married couple. An allowance of EUR 922.50 per child is either paid by the Caisse Nationale des Prestations Familiales or through a tax credit claimed with with the submission of the tax declaration. Personal allowances vary from EUR 2,016 for a single person to EUR 8,532 for a married couple who both work. Non-residents are taxable on their Luxembourg income only with a minimum tax rate of 15 % on income other than salaries and pensions.

Art. 153 LIR requires all Luxembourg residents and non-residents to submit an annual income tax return if their taxable revenue exceeds EUR 100,000. Also if the taxpayer has two jobs or receives a salary and a pension or taxpayer and spouse both work or one receives a pension and their taxable revenue exceedds EUR 36,000 and they fall under tax class 1 or 2 or EUR 30,000 if the taxpayer falls into tax class 1a.

A taxpayer must also submit a tax return if his other Income not subject to tax at source is greater than EUR 600, investment income is greater than EUR 3,050 (tax free allowance), dividend income subject to withholding tax is greater than EUR 1,525 (only 50% of European dividends taxable) or the taxpayer has made a loss in the business income, professional income or rental income (i.e. mortgage interest deduction) category. If the taxpayer does not exceed any of the limits and is not entitled or required to make a personal income tax return then he can still submit a tax equalisation return to claim deductible expenses not previously deducted on his tax card.

Social security (sécurité sociale) The following social security rates apply to employees and employers and are calculated on employees' gross salary including benefits in kind up to a ceiling of EUR 100,965.60 per annum (EUR 8,413.80 per month). Social security contributions are tax deductible for both employees and employers.

'Assurance-Dépendance' is due by Luxembourg residents and non-residents who earn a salary or independent remuneration in Luxembourg and is calculated at the rate of 1.4% on net taxable income in excess of 25% of the minimum social salary with no ceiling and is not tax deductible. The monthly contribution for 'Assurance Dépendance' is calculated on professional income earned by individuals. In addition, an annual contribution is calculated on the net taxable income declared on the annual tax return that includes: investment, rental and other income after deduction of related expenses. Contributions amounting to less than EUR 25 per year are ignored.

The monthly minimum social salary is indexed and amounts to approximately EUR 1,700 gross per month.

An additional contribution has been introduced, the ‘Mutualité de Employeurs’. This contribution is collected in order to reimburse the employer 80% of the salary including charges in case of illness. (in specific cases reimbursement of 100%). The self employed has the choice to contribute to this or not.

Investment income EUR 1,500 of investment income for a single person and EUR 3,000 for a married couple is tax free, including dividends and interest. 50% of the dividends received from European Companies are exempted. In accordance with the law, any Luxembourg paying agent that pays interest to a Luxembourg resident beneficial owner must apply a final withholding tax of 10%. The withholding is final in the sense that: no further tax is payable on the income;

• the income is not required to be reported in the tax payer's tax return;
• the income is not taken into account when calculating the average rates of tax on the income.

No withholding tax will applies up to an amount of EUR 250 of interest on savings accounts.

 Capital gains Capital gains are taxable at the marginal rate. Exceptions are:

• There is a capital gains tax exemption of EUR 50,000 for a single person and EUR 100,000 for married couple. Capital gains on one's principle private residence and on shares held for more than six months in companies in which one held less than 10 % of the share capital are tax exempt.  
• Capital gains on real estate (non principle residence) owned more than two years and on shares held for more than six months in companies in which one held more than 10% of the share capital are taxed at half global tax rate. A tax free capital gains allowance of EUR 50,000 for a single person (or EUR 100,000 for married couples or partners) is granted to these latter capital gains.

Wealth tax (impôt sur la fortune) Wealth tax was abolished from 1 January 2006.  

b) Companies  

Corporate tax (impôt sur le revenu des collectivités) Corporate income tax is charged at 20.80 % to 21.84 % on worldwide income exceeding EUR 15,000, subject to foreign tax relief, in accordance with applicable double tax agreement. Non-resident companies are taxed on Luxembourg source income only. Losses may be carried forward indefinitely. Fiscal integration is also possible if the parent company owns at least 95% of the subsidiary (75 % with a special agreement). Participation exemption dividends received are tax exempt.

Municipal Business tax Companies are also charged a municipal business tax on profits (impôt commercial communal) depending on the commune where their registered office is located. In Luxembourg city, the rate amounts to 6.75 % on taxable income.

Therefore, the maximum effective rate, including corporate tax, for Luxembourg city is 28.59 %.The taxable income is reduce by an allowance of EUR 17,500.

Capital gains for corporations These are treated as ordinary income and taxed accordingly. Participation exemption capital gains are exempt from corporate tax.  

Participation exemption (le régime mère-fille: Parent Subsidiary Directive) Dividends received by the Luxembourg SoParFi from any company in which the SoParFi has at least a 10 % shareholding (or if less, whose acquisition cost was at least EUR 1,200,000) are excluded from taxable profit of the SoParFi if the company gives the Luxembourg tax authorities an undertaking that it intends to hold the shares for at least 12 months. Capital gains derived from the sale of shareholdings in other companies are excluded from taxation if the company gives the Luxembourg tax authorities an undertaking that it intends to hold the shares for at least 12 months and if they represent at least a 10 % shareholding (or if less, whose acquisition cost was at least EUR 6,000,000). In addition, the following conditions must be met:

• The SoParFi, branch or permanent establishment, must be liable to Luxembourg tax
• The distributing company, if resident in Luxembourg, must also be liable to Luxembourg tax; if non-resident, it must be subject to a system of foreign tax similar to Luxembourg income tax (i.e. at least 10.5 %).  

Although dividends and capital gains are tax exempt, the financing costs due to borrowing for the purchase of a participation which exceeds the exempt dividend income received or capital gain made and valuation adjustments on the participation remain tax deductible. This allows a SoParFi to tax protect other financial or trading income. When a capital gain is made, a portion of the gain equivalent to the amount of other financial or trading income that was tax protected in the past, will be subject to taxation in the financial year in which the gain is made.

Wealth tax (impôt sur la fortune) Wealth tax is charged on the net asset value of a company as at 1 January of each year. Ordinary wealth tax is charged at the rate of 0.5 %, with a minimum of € 25 for an S.à r.l. and € 62 for an S.A. if the company existed on 1 January of the fiscal year

Withholding tax (Retenue d'impôt à la source) The normal rates of withholding tax are 15 % on dividends (zero on dividends paid to an EC parent and paid to parent companies resident of a country with which Luxembourg has concluded a Double Tax Treaty); 0 % on royalties; and 0% on interest. Double Tax Treaties may reduce these. Also, a withholding tax of 20 % is levied on directors' and statutory auditors' fees.  

Capital registration duty ('droit d'apport') The capital registration duty has been abolished from January 1st, 2009. Now a fixed registration duty of EUR 75 is due for constitution of a company and for each modification of its statutes as transfer of the seat or change of the object of the company. This fixed registration duty is applicable to SoParFi, but also to SICAR, SIF, Securitization Vehicules and Investment vehicule for private individual (“SPF”),

• Contribution of real estate, located in the Grand Duchy of Luxembourg, to a civil or commercial company remunerated by shares are subject to a 0,6% registration duty + a 0,5% transcription tax;
• Contribution of real estate, located in the Grand Duchy of Luxembourg, to a civil or commercial company remunerated by other means than shares are subject to a 6% registration duty + a 1% transcription tax (4% for Luxembourg town);

Investment tax credit (bonification d'impôt pour investissement) Investment in depreciable fixed assets (including software but excluding cars and land and buildings) carries a tax credit of 12 %, against corporate income tax. Additional credits between 2 % and 6 % are available on investments in tangible assets depreciable over a minimum of 3 years. There are 'anti-abuse' provisions relating to certain types of leasing arrangements. Unused credits can be carried forward for 10 years.  

Value added tax (TVA) Everyone carrying on an activity with a view to profit, having an annual turnover exceeding EUR 10,000 must register for VAT. This is charged at 15 %, 12 %, 6 % and 3 %, with VAT rules closely following the EC Sixth and Eighth Directives.

For personal income tax you make an annual tax declaration to the relevant tax office responsible for the area in which you live. Contact the Administration des Contributions Directes. Tel: 40 800-1. To check your area, go to their website and click on Profil de l'Administration/ Adresses et Competences/ Section des Personnes Physiques. See also their summary of direct taxes English version.

For corporate income tax you also apply to the Administration des Contributions Directes. To check your area, go to their website and click on Profil de l'Administration/ Adresses et Competences/ Section des Sociétés.

For VAT and other duties you apply to the Administration de l'Enregistrement et des Domaines. Tel: 44 905-1. For salary withholding tax you register your company at Centre Commun de la Sécurité Sociale. Tel: 40 141-1.

You apply to the Centre Commun de la Sécurité Sociale. Tel : 40 141-1.

There are a number of sources of state aid available for setting up a business.

The Ministry of Middle Classes provides SMEs (small and medium-sized businesses) with grants or reduced interest rates for investment in tangible or intangible fixed assets, external consultants’ services, participation in exhibitions, investments relating to the protection of the environment and the efficient use of natural resources, the relocation of businesses, the renovation of polluted sites, investments in innovation and R & D and in food quality and hygiene. A guiding principle governing this aid is the strengthening of competitiveness of Luxembourg’s SMEs. Full details including how to apply for aid are available in English on the Ministry’s website in the section State aid.

The SNCI (Société Nationale de Crédit et d’Investissement) is a bank specialising in medium and long term financing of investments made by Luxembourg companies. Its financing instruments are investments in fixed assets, innovations and exports. It also grants start-up loans to newly incorporated SME’s. It may also finance investments of Luxembourg companies abroad. It may take equity positions, either directly or through its subsidiary CD-PME S.A., or by affiliated financing companies. CD-PME was set up together with five Luxembourgish commercial banks to reinforce the equity base and financial strength of SMEs. Full details are available in English on the SNCI website.

The Ministry of Tourism grants financial aid for investments in Luxembourg’s tourist infrastructure. Details in English on the Ministry’s website under Financial aid. The Ministry of the Economy and Foreign Trade provides aid for investment and R & D by industrial and service companies which promote the economic development of Luxembourg. It also provides aid for regional development and, through the Office du Ducroire (see below), aid for foreign trade.

Full details of all the above sources of aid and how to apply are also available in English on the Luxembourg Portal for Innovation and Research.

The Luxembourg Chamber of Commerce operates a mutual company for loan guarantees – the MCAC (Mutualité de Cautionnement et d’Aide aux Commerçants) – which guarantees loans from authorised lenders in Luxembourg to SME members of the Chamber of Commerce. Details on the Chamber’s website under Services/ Mutualité de Cautionnement.

Other sources of aid that may be relevant to setting up a business include the following: The Office du Ducroire helps Luxembourgish companies enter export markets by means of partial reimbursement of certain costs and credit guarantees. The Ministry of National Education and Vocational Training provides co-funding of continuing vocational training. Details in English on the website of the INFPC (National Institute for the Development of Continuous Vocational training). The Ministry of Labour and Employment provides aid for training, especially for work placements, and for the employment of the elderly and long term unemployed. The Ministry of Finance provides tax credits for the employment of unemployed job seekers. The Ministry of the Environment provides grants to incentivise the generation of electricity in Luxembourg by means of wind power.

Start-up capital can be sought via the Luxembourg Business Angels Network (LBAN). Its main objective is to create a forum to bring together capital-seeking entrepreneurs and the Business Angels within Luxembourg and the Greater Region. A Business Angel Network is an organisation that aims to bring together new or growing small and medium sized companies (entrepreneurs) with Business Angels. The aim is to increase the efficiency of the informal segment of venture capital and bridge the gap between the entrepreneur's own funds and those available from formal venture capitalists.

One of the main missions of The Luxembourg Chamber of Commerce is to defend the interests of business by commenting on proposed legislation. Details of proposed legislation and the Luxembourg Chamber of Commerce's comments are available in French on their website in the section "Avis et Affaires Juridiques", where it is also possible for you to submit your own comments. Tel. +352 42 39 39-354.

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