Setting Up A Company In Luxembourg: Practical Guide And Tips

Published on October 1, 2025 and written by Cyril Jarnias

Luxembourg, a small country at the heart of Europe, has established itself as a prime destination for entrepreneurs worldwide. With its robust economy, political stability, and attractive tax environment, the Grand Duchy offers fertile ground for creating and developing innovative businesses. In this article, we will explore in detail the benefits, procedures, and essential considerations for establishing your company in Luxembourg.

Why is Luxembourg an Entrepreneur’s Paradise?

Luxembourg continues to attract investors and entrepreneurs thanks to its numerous assets. Its strategic geographical position, at the heart of the European Union, makes it an ideal gateway to the European market. The country benefits from a diverse and resilient economy, with one of the highest GDP per capita in the world.

Luxembourg’s political and economic stability is a key factor in its attractiveness. The country enjoys a AAA rating from major credit rating agencies, demonstrating its financial strength. This stability reassures investors and creates an environment conducive to long-term business.

The Luxembourg regulatory framework is particularly favorable to businesses. The government has implemented pro-business policies, especially in the finance, technology, and innovation sectors. Administrative procedures for company formation are simplified and efficient, allowing for quick business startup.

Legal Structures That Make a Difference

Luxembourg offers several legal forms adapted to the varied needs of entrepreneurs. Here are the main structures to consider:

• Société à Responsabilité Limitée (SARL) – Private Limited Company: This is the most popular form for SMEs. It offers great flexibility and a minimum share capital of €12,000.
• Société Anonyme (SA) – Public Limited Company: Ideal for large companies, it requires a minimum capital of €30,000 and offers a prestigious image.
• Société par Actions Simplifiée (SAS) – Simplified Joint-Stock Company: It combines the flexibility of the SARL with some advantages of the SA, particularly in terms of governance.
• Société en Commandite Spéciale (SCSp) – Special Limited Partnership: Highly sought after in the investment fund sector, it does not have its own legal personality.

Each structure has its specific advantages in terms of partner liability, management flexibility, and tax implications. The choice of legal form will depend on your business objectives, the size of your company, and your development strategy.

The SARL remains the preferred choice for many foreign entrepreneurs due to its management simplicity and accessible share capital. It offers effective protection of partners’ personal assets while allowing great flexibility in the company’s internal organization.

Advantageous Taxation to Boost Your Growth

The Luxembourg tax regime is one of the country’s major assets for businesses. Although Luxembourg is not strictly speaking a tax haven, it offers a competitive tax framework and significant benefits for certain types of activities.

The corporate tax rate in Luxembourg is 17% for income exceeding €200,000. This rate is complemented by a 7% employment fund contribution, bringing the effective rate to 18.19%. For income below €175,000, a reduced rate of 15% applies[1][2].

Luxembourg also offers attractive special tax regimes, including:

• The financial participation company regime (SOPARFI), allowing exemption from dividends and capital gains under certain conditions.
• The intellectual property regime, offering partial exemption from income from patents and copyrights.
• Tax incentives for research and development, encouraging innovation.

Additionally, Luxembourg has concluded numerous international tax treaties, avoiding double taxation and facilitating cross-border operations. This attractive tax policy, combined with the country’s economic stability, makes it a prime destination for holdings and international companies.

Creating Your Company in Luxembourg: A Simplified Process

Company formation in Luxembourg follows a well-defined process that can be completed relatively quickly with good preparation. Here are the main steps:

1. Choose the legal form: Determine the structure best suited to your project (SARL, SA, SAS, etc.).

2. Check name availability: Ensure the chosen name for your company is available with the Trade and Companies Register (RCS).

3. Draft the articles of association: Prepare your company’s articles of association, defining its corporate purpose, capital, governance, etc. For certain legal forms like the SA, notary involvement is mandatory.

4. Open a bank account: Deposit the share capital into a Luxembourg bank account.

5. Obtain establishment authorization: Apply for an establishment authorization from the Ministry of the Economy, necessary to conduct commercial activity.

6. Register with the RCS: Register your company with the Trade and Companies Register.

7. Affiliate with social security: Register your company and employees with the Joint Social Security Center (CCSS).

The total time to create a company in Luxembourg can range from 2 to 4 weeks, depending on the complexity of the case and the responsiveness of the various stakeholders[6][8].

Luxembourg vs Other Offshore Jurisdictions: A Strategic Choice

Compared to other popular offshore jurisdictions, Luxembourg stands out in several aspects:

Reputation and stability: Unlike some tax havens, Luxembourg enjoys an excellent international reputation and unwavering political and economic stability. This offers increased security for investors and entrepreneurs.

Access to the European market: As an EU member, Luxembourg offers direct access to the single European market, a significant advantage compared to non-EU jurisdictions like the Cayman Islands or Bermuda.

Strong regulatory framework: Luxembourg complies with international standards on tax transparency and anti-money laundering, strengthening its credibility with business partners and financial institutions.

Financial expertise: The country has a sophisticated financial ecosystem and a highly skilled workforce, particularly in the finance and technology sectors.

Although other jurisdictions may offer lower tax rates, Luxembourg offers a unique balance between tax advantages, stability, and access to international markets.

Social Obligations: A Balanced System

The Luxembourg social security system is renowned for its quality and comprehensiveness. Employers have significant obligations regarding social protection for their employees:

• Mandatory affiliation: Every company must affiliate with the Joint Social Security Center (CCSS) upon hiring the first employee[9].
• Social contributions: Employers must pay social contributions for their employees, covering health insurance, pension, accident insurance, and more.
• Monthly declarations: Companies must submit monthly salary and contribution declarations to the CCSS.

The total cost of social charges for the employer represents approximately 15% of the gross salary. Although this rate may seem high, it remains competitive compared to other European countries and guarantees quality social coverage for employees.

Luxembourg also offers some flexibility in human resources management, with employment contracts adapted to company needs (permanent contracts, fixed-term contracts, temporary work, etc.).

Opening a Corporate Bank Account: Keys to Success

Opening a corporate bank account in Luxembourg is a crucial step in the company formation process. Here is the procedure to follow:

1. Choose a bank: Select a reputable Luxembourg bank based on your specific needs (international services, digital solutions, etc.).

2. Prepare documents: Gather necessary documents, typically including: – Company articles of association – Extract from the Trade and Companies Register – Identification documents of directors and beneficial owners – A detailed business plan – Proof of fund origin

3. Meet with a relationship manager: Schedule an appointment with the bank to present your project and documents.

4. KYC (Know Your Customer) verification: The bank will conduct thorough checks on your company and its directors.

5. Contract signing: Once the file is approved, you can sign the account opening contract.

6. Initial deposit: Make the share capital deposit or an initial deposit according to the bank’s requirements.

The process can take from a few days to several weeks, depending on the complexity of your structure and the bank’s responsiveness. It is recommended to start this process as early as possible in your company formation journey.

Future Sectors in Luxembourg: Where to Invest?

Luxembourg has successfully diversified its economy beyond the traditional financial sector. Several emerging sectors offer promising opportunities for entrepreneurs:

Information and Communication Technologies (ICT): Luxembourg is heavily investing in digital infrastructure and attracting numerous tech companies. Cybersecurity, cloud computing, and artificial intelligence are particularly dynamic fields.

Fintech and innovative financial services: The country is positioning itself as a hub for fintechs, offering a regulatory environment favorable to innovation in financial services.

Circular economy and cleantech: Luxembourg strongly encourages initiatives related to sustainable development, offering opportunities in renewable energy, waste management, and eco-innovation[5].

Space industry: The country is actively developing its space sector, with initiatives like SpaceResources.lu, opening prospects in space exploration and resource utilization.

Logistics and e-commerce: Luxembourg’s central geographical position makes it an ideal logistics hub for Europe, with growing opportunities in e-commerce and smart logistics.

These sectors often benefit from government support, tax incentives, and a dynamic innovation ecosystem, making Luxembourg particularly attractive for visionary entrepreneurs.

Recruiting in Luxembourg: Attracting the Best Talent

Recruitment in Luxembourg presents unique challenges but also great opportunities to attract international talent. Here are some key points to consider:

Skilled and multilingual workforce: Luxembourg has a pool of highly qualified, often multilingual talent, which is a major asset for international companies.

International labor market: Don’t hesitate to expand your search beyond Luxembourg’s borders. The country attracts many cross-border workers from France, Germany, and Belgium.

Competitive salaries: Salaries in Luxembourg are among the highest in Europe, which can be an attraction factor for talent but requires careful budget planning.

Recruitment process: 1. Precisely define your skill requirements. 2. Use local and international recruitment platforms. 3. Collaborate with specialized recruitment agencies if necessary. 4. Highlight the advantages of working in Luxembourg (quality of life, international environment, etc.).

Work permits: For non-EU employees, ensure you obtain the necessary authorizations. Luxembourg has simplified procedures for certain highly qualified profiles.

Continuing education: Luxembourg strongly encourages vocational training. Consider skills development programs to attract and retain talent.

By leveraging cultural and linguistic diversity, and offering professional development opportunities, you can build a high-performing and innovative team at the heart of Europe.