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Characteristics

GENERAL
Type of entity
Joint-Stock Company
(Société Anonyme – SA)
Private Limited Liability Company
(Société à Responsabilité Limitée- SARL)
Type of law
Continental law
Our time to establish a new company
10-20 days
Migration of Domicile permitted
Yes
Corporate taxation
15-27 %
Double taxation treaty access
More than 75 countries
SHARE CAPITAL OR EQUIVALENT
Standard currency
EUR
Permitted currencies
Any
Minimum paid up
30 987 EUR for SA

12 395 EUR for SARL
DIRECTORS OR MANAGERS
Minimum number
1 director
Local required
No
Corporate directors permitted
Yes
Publicly accessible records
Yes
Location of meetings
Anywhere
SHAREHOLDERS OR MEMBERS
Minimum number
1 shareholder
Publicly accessible records
No
Location of meetings
Anywhere
COMPANY SECRETARY
Required
Yes
Local or qualified
No
ACCOUNTS
Requirement to prepare
Yes
Audit requirements
Yes
Requirement to file accounts
Yes
Publicly accessible accounts
No
OTHERS
Language
German, French, Luxembourgish
Transfer pricing
Yes
Controlled foreign companies
Thin capitalization Exchange control
No
Change in domicile permitted
Yes

INTEREST OF THE JURISDICTION

Advantages of a company in Luxembourg

  • One of the most prestigious European jurisdictions;
  • Luxembourg is the financial center of Europe;
  • Stable political situation and high economic indicators of the country;
  • Convenient geographical location;
  • A favorable environment for investment and business.

Main info

Luxembourg is a highly developed country, which is characterized by one of the highest living standards in the world. This country became one of the founders of the EU, an economic union with the Netherlands and Belgium. Today Luxembourg can rightly be called the financial center of Europe and plays an important role in the international sphere.

The neighbors of Luxembourg are Belgium, France and Germany, the area of this country is 2.5 thousand km², and the population is less than 600 thousand people.

The political structure of the Grand Duchy of Luxembourg is represented by a constitutional monarchy. The Grand Duke leads the country and exercises executive power. The government in the composition of the prime minister and ministers helps him in this. The government is appointed by the monarch, but is responsible for its activities before the parliament.

Legislative power belongs to the parliament. This body consists of 60 deputies elected for a period of 5 years.

Also in Luxembourg, an advisory body may be convened, which, under the Constitution, is called the State Council.

Its main duties are to advise the government and parliament on lawmaking, discuss bills and international treaties.

The judiciary in Bulgaria is independent of other power structures and is represented by district, administrative, military, appellate courts, the Supreme Court of Cassation and the Supreme Administrative Court.

In addition, Bulgaria has a Constitutional Court that provides interpretations of the Constitution and international treaties of Bulgaria with respect to their compliance with the Bulgarian Constitution.

Administration in the regions is carried out by commissars.

The supreme judicial body is the Supreme Court, it consists of the Court of Cassation and the Court of Appeal. Courts of first instance are represented by district courts, and the world's courts are the lowest level of the judicial system. Luxembourg also has a system of administrative, social and military justice.

Types of companies and incorporation procedure

The two main business forms organizations in Luxembourg are the Joint-Stock Company (Société Anonyme – SA) and the Private Limited-Liability Company (Société à Responsabilité Limitée– SARL).

Both types of companies provide for limited liability of their participants. All types of companies must be register in the Trade Registry.

01. Limited Liability Company

The minimum authorized capital of SARL is 12,395 EUR, which must be fully paid after registration.

It is not required to hold annual meetings of shareholders, if their number is less than 25 people.

02. Joint-Stock Company

To create an SA requires it needs a larger share capital of 30,987 EUR, but at the time of registration it is allowed to pay 25% of the value of each share. Shareholders can be both individuals and legal entities.

03. Partnerships

The General Meeting of Shareholders has broad powers with respect to all matters relating to the activities of the company. One of the main powers is to increase the company's share capital.

At least one general meeting of shareholders of the company should be held annually in accordance with the constituent documents.

To create SA and SARL, one participant is sufficient, and one director needs to manage such companies. For SA it is possible to use a two-level management system that provides for the presence of a supervisory board, which appoints members of the management board. The Supervisory Board should consist of at least three persons who are appointed at the general meeting.

The law also includes provisions for the creation of a European company (Société Européenne - SE) in accordance with EU Council Regulation and Council Directive.

Taxation

  • In Luxembourg, resident companies are subject to corporate income tax on their world income, unless otherwise provided for by the tax treaty. Non-resident companies are taxed only on income from sources in Luxembourg. The company is considered to be a resident of Luxembourg for tax purposes, if its statutory place (registered office) or its main place of management is in Luxembourg. The main place of management is defined as the center from which the company's activities are directed.

    Taxable income is based on annual financial statements. For tax purposes, profit on financial statements is adjusted taking into account all deductions (for example, certain types of expenses, or in accordance with the agreement on avoidance of double taxation).

  • Capital gains are considered ordinary income and taxed at normal rates. The capital gains arising from the sale of shares may be exempt from taxation, under certain conditions. The company must be covered by the EU directive on parent and subsidiary companies, which is subject to a corporate income tax of Luxembourg of not less than 10.5%. In addition, participation must be at least 10% of the authorized capital or at least 6,000,000 EUR in investments; and also last at least a year.

  • Commercial expenses may be deductible, except for some excessive costs.

    Dividends paid by the Luxembourg company are fully taxed withholding tax at a rate of 15%. However, this indicator can be reduced in accordance with the terms of various tax agreements concluded by Luxembourg.

  • The interest paid by the Luxembourg company is generally not subject to income tax. This also applies to royalties related to patents, intellectual property rights paid by the Luxembourg company.

    The corporate income tax rate depends on the amount of the company's profit: 19% in the case of an annual income of more than 30,000 EUR, 15% if the company's income is not more than 25,000 EUR. You should also take into account the municipal tax of 6.75% and the bonus for solidarity. As a result, the overall tax rate for the company in Luxembourg will be 27.08%.

  • The VAT rate in Luxembourg is 17%, and lower rates for certain types of goods and services may also apply.

Banking system and economy overview

Economic indicators of Luxembourg bring this small country to the first places in the ratings on income and living standards. The economy of the country is built on market principles, stable and productive. Luxembourg's foreign trade is based on trade relations with the EU countries, especially Belgium, Germany and France. A feature of Luxembourg's economy is that a significant portion of exports are services, including financial ones.

The industry is represented mainly by the extraction of iron ore. Traditional agriculture is also developed. The following key factors play an important role in the Luxembourg economy:

  • Small territory;
  • The concentration of financial services for the whole of Europe;
  • High competitiveness.

In addition to the favorable geopolitical location and concentration of financial and credit institutions, investors are attracted by a skilled workforce.

The basis of the economy is a significant measure of the service sector, especially in the financial sector. The financial and banking sector of Luxembourg makes this country famous and attractive for investment and business, which made Luxembourg the financial center of Europe. More than 12 thousand companies are registered here and more than 200 banks work.

Control and regulation of the banking sector is vested in the Luxembourg Central Bank and the Financial Sector Supervision Commission. Most of the banks registered in Luxembourg are members of the Association of Banks and Bankers of Luxembourg. The advantages of Luxembourg can be attributed to a stable political system and legislation, a wide range of services offered by banks and non-bank financial intermediaries, a high level of skills of the workforce, confidentiality of information about the bank's clients and maintaining a high level of bank secrecy.

HOW TO
PROCEED

To incorporate or purchase a company the following documentation should be provided:

01

A completed application form signed by the company or by the representative

03

A personal bill, which is less than 3 months old from the date of the application

02

Copy of valid passport

04

Payment of our fees

Note: additional documents may be required depending on the certain offshore bank.

Set-up time: From the moment, we are in possession of all required documents:

3 days

Incorporation of
a company or purchase
of an existing company

15 days

Delivery of the original
company documents

3 weeks

Offshore Bank: offshore
bank account opening