Published on and written by Cyril Jarnias
Luxembourg, this small country at the heart of Europe, has become a true promised land for entrepreneurs worldwide. With its dynamic economy, political stability, and business-friendly environment, the Grand Duchy offers fertile ground for creating and developing innovative startups. In this article, we will explore in detail why Luxembourg is a prime destination for launching your startup, what legal structures are most suitable, and how to fund your project to propel it toward success.
Luxembourg: A Paradise for Startups Seeking Growth
Luxembourg is not only known for its banks and European institutions. In recent years, the country has established itself as an essential hub for startups, attracting entrepreneurs from around the world thanks to its dynamic ecosystem and numerous advantages.
A Stable and Prosperous Economic Environment
Luxembourg benefits from a robust and diversified economy, with one of the highest GDP per capita in the world. This economic stability provides a secure framework for entrepreneurs looking to develop their business long-term. Additionally, the country enjoys an excellent financial rating (AAA), which strengthens its credibility with international investors.
A Strategic Position at the Heart of Europe
Located at the crossroads of Germany, France, and Belgium, Luxembourg offers privileged access to the European market. This strategic geographic position allows startups to easily expand throughout Europe and benefit from a pool of multilingual and multicultural talent.
A Thriving Innovation Ecosystem
The Luxembourg government has implemented proactive policies to support innovation and entrepreneurship. Initiatives such as the Luxembourg House of Financial Technology (LHoFT) or the Luxembourg-City Incubator demonstrate this commitment to creating an environment conducive to the emergence and development of startups. In 2024, the country had over 500 active startups, a number that has been steadily increasing for several years.
State-of-the-Art Infrastructure
Luxembourg boasts some of the most advanced digital infrastructures in Europe. With extensive 5G coverage and next-generation data centers, the country provides startups with the necessary tools to innovate and grow rapidly.
Good to Know:
Luxembourg regularly ranks among the top 20 countries worldwide in the World Bank’s Ease of Doing Business Index, highlighting its attractiveness to entrepreneurs.
Ideal Legal Structures for Your Luxembourg Startup
Choosing the right legal structure is a crucial step in creating your startup in Luxembourg. Here are the most suitable options and their main characteristics.
The SARL (Limited Liability Company)
The SARL is the most popular choice for startups in Luxembourg, and for good reason. It offers great flexibility and limited liability for partners. Since 2017, there has even been a simplified version, the SARL-S, which allows creating a company with a minimum share capital of just one euro.
- Minimum share capital of 12,000 euros (1 euro for the SARL-S)
- Partners’ liability limited to their contributions
- Flexibility in management and decision-making
- Possibility of having a single partner (single-member SARL)
The SA (Public Limited Company)
For startups with ambitions for rapid growth and aiming for a medium-term stock market listing, the SA can be an interesting option. It offers an image of prestige and solidity but requires a higher share capital.
- Minimum share capital of 30,000 euros
- More formal governance structure with a board of directors
- Ease in raising funds through share issuance
- Image of credibility with partners and investors
The SAS (Simplified Joint-Stock Company)
Although less common in Luxembourg, the SAS is gaining popularity among startups due to its great statutory flexibility. It allows founders to freely define the operating rules of their company.
- Freedom in drafting the articles of association
- Possibility to create preferred shares
- Flexibility in organizing management
- Suitable for startups with multiple founders having different roles
Good to Know:
Regardless of the legal form chosen, it is mandatory to obtain an establishment authorization from the Ministry of the Economy to conduct commercial activity in Luxembourg.
Funding Your Startup: Options Available in Luxembourg
Funding is often the lifeblood for startups. Fortunately, Luxembourg offers a wide range of options to support the development of your business.
Public Aid and Grants
The Luxembourg government has implemented numerous aid programs to support innovation and entrepreneurship. Among the most notable:
- Fit 4 Start: An acceleration program offering intensive coaching and up to 150,000 euros in funding to selected startups.
- Innovation aids from Luxinnovation: Grants covering up to 50% of R&D costs for innovative projects.
- Digital Tech Fund: A public-private investment fund dedicated to early-stage tech startups.
Venture Capital and Business Angels
Luxembourg has an active network of private investors ready to support promising startups. Organizations like the Luxembourg Business Angel Network (LBAN) facilitate connections between entrepreneurs and investors. Additionally, several venture capital funds are based in Luxembourg, offering funding opportunities for different stages of your startup’s development.
Incubators and Accelerators
The country has several support structures that offer not only workspace but also access to funding and a network of mentors. For example:
- Luxembourg-City Incubator: A generalist incubator located in the heart of the capital.
- Technoport: An incubator specialized in innovative technologies.
- LHoFT (Luxembourg House of Financial Technology): An accelerator dedicated to fintech.
Bank Financing
Luxembourg banks offer financing solutions tailored to startups, including state-guaranteed loans or specific credit lines. The SNCI (National Credit and Investment Company) also provides loans at favorable rates for young innovative companies.
Crowdfunding
Although less developed than elsewhere in Europe, crowdfunding is gaining ground in Luxembourg. Local platforms like Raizers allow startups to raise funds from the general public, offering an interesting alternative to traditional financing methods.
Good to Know:
In 2024, Luxembourg startups raised over 500 million euros in funds, demonstrating the growing attractiveness of the ecosystem to investors.
Conclusion: Luxembourg, a Launchpad for Your Startup
Creating a startup in Luxembourg offers numerous advantages: a stable economic environment, a dynamic innovation ecosystem, state-of-the-art infrastructure, and privileged access to the European market. With suitable legal structures like the SARL-S that allows starting with minimal capital, and a multitude of funding options ranging from public aid to venture capital, the Grand Duchy positions itself as a prime destination for ambitious entrepreneurs.
However, navigating this opportunity-rich ecosystem can be complex, especially for foreign entrepreneurs. That’s why it’s crucial to surround yourself with experts who know the specifics of the Luxembourg market and can guide you at every step of your entrepreneurial journey.
Disclaimer: The information provided on this website is for informational purposes only and does not constitute financial, legal, or professional advice. We encourage you to consult qualified experts before making any investment, real estate, or expatriation decisions. Although we strive to maintain up-to-date and accurate information, we do not guarantee the completeness, accuracy, or timeliness of the proposed content. As investment and expatriation involve risks, we disclaim any liability for potential losses or damages arising from the use of this site. Your use of this site confirms your acceptance of these terms and your understanding of the associated risks.
Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
