Luxembourg is a wealthy country in Europe with a good environment for business. Its strong economy and central location make it an attractive place for investors and business owners. Luxembourg's business-friendly regulations and tax system make it an attractive place to do business.
Where do you start? If you want to start a company in Luxembourg and don't know where to begin, you've come to the right place. This guide will show you the different types of companies you can set up in Luxembourg and explain how to register one.
Why choose Luxembourg for your business?
Luxembourg is a great place to start a company. It has a strong infrastructure, a stable political and legal system, and a competitive tax system. It is a well-known financial hub, so it is a good place to set up companies.
But there are also some disadvantages. If you want to start a company in Luxembourg, know the pros and cons and see how they affect you. We can help you with that.
| Pros | Cons |
| Good tax system Luxembourg offers a competitive corporate tax rate along with various tax exemptions. Additionally, it has signed double taxation agreements with over 80 countries, helping businesses avoid paying taxes twice on international income. | Expensive operations While the cost of setting up a company in Luxembourg can be manageable, operating costs can be significantly higher. Luxembourg is expensive to live in, especially when it comes to renting. In addition, salaries in the country are higher than in other countries, starting with the minimum wage, one of the highest in Europe. Payroll can be a big expense for a company. |
| Located in middle of Europe Situated in the heart of Europe, Luxembourg provides easy access to major EU markets. With proximity to countries like Germany, France, and Belgium, businesses operating in Luxembourg can easily expand their operations across Europe. | Big companies Luxembourg is home to numerous multinational corporations and investment funds, particularly in finance and technology. This high level of competition can make it challenging for new businesses to stand out, especially in these established sectors. |
| International scene Luxembourg’s diverse, multilingual population (Luxembourgish, French, German, and English) makes it an attractive destination for international business. The capital is home to a strong expat community and an international business environment, making it easier to navigate global markets. | Limited local market Luxembourg is a small country, which means its domestic market is limited. Companies relying on local consumption may find fewer opportunities compared to larger European markets, so global expansion is often necessary. |
| Stability Known for its political stability and robust, diversified economy, Luxembourg provides a secure environment for businesses to thrive. Its well-regulated financial sector ensures solid economic foundations, offering confidence to investors and entrepreneurs. | Regulations are complex While Luxembourg is generally business-friendly, certain industries, particularly finance, are heavily regulated. Navigating bureaucratic procedures can be time-consuming, and businesses may encounter regulatory hurdles during the setup process. |
| Attraction of talent Luxembourg benefits from a highly educated workforce, particularly in sectors like finance, technology, and research. Its excellent quality of life and strong social welfare policies also make it attractive to international talent. | High personal income taxes While corporate taxes are competitive, personal income taxes and social contributions are relatively high. This can affect expatriates or business owners who plan to live and work in Luxembourg. |
| Digitalisation rules Luxembourg is a hub for digital infrastructure, offering advanced data centers and top-tier communication technologies. In addition, the country has excellent transport and logistics networks, essential for businesses looking to expand across Europe. | Financial services approach Luxembourg’s economy is heavily centered on financial services. While there is growing interest in other sectors, businesses outside of finance may find fewer resources and a less developed ecosystem compared to other industries. |
Types of business forms in Luxembourg
One of the first key steps in Luxembourg company formation is selecting the right type of business entity. Luxembourg offers a variety of company types, each with its own unique features and requirements. It's essential to understand these different structures to determine which one aligns best with your business objectives.
The requirements are somewhat similar across different forms of companies:
- To set up a company in Luxembourg, you must open a corporate bank account in the country where the company’s share capital will be deposited. This requirement is lifted for simplified companies, such as SARL-S.
- Every company must have a registered office in Luxembourg, which serves as its official address and primary place of business. This address is required when registering the company with the Luxembourg Trade and Companies Register (RCS).
- Depending on the type of activity the company will engage in, a business license or “permit of establishment” may be required. This is mandatory for companies involved in commercial, industrial, or craft activities, as well as certain self-employed professions.
- Once the necessary documents are in place, all businesses must register with the Luxembourg Trade and Companies Register (RCS). This registration is essential for the legal operation of any business entity in Luxembourg.
Now that we’ve covered the common requirements, let’s look at the main company types in Luxembourg so you can make an informed decision when selecting the right structure for your business.
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Learn moreSole Proprietorship (Self-Employment)
A sole proprietorship is the simplest form of business structure in Luxembourg. In this setup, a single individual, such as a freelancer, artisan, or self-employed professional, operates as a business without the need for a separate legal entity. Unlike other business types, there is no requirement for minimum capital investment, and all profits and losses are treated as personal income. However, the sole proprietor is fully liable for all business debts and obligations, which can pose a significant financial risk.
Who is it suitable for?
- Freelancers and self-employed professionals offering services such as consulting, design, programming, and other professional services.
- Small traders or individuals starting a small, local business.
- Entrepreneurs looking to launch their business activities without the complexity of forming a legal corporate structure.
- Individuals who prefer to operate a single-person business rather than establishing a corporate entity.
Requirements
- In a sole proprietorship, the business is owned and managed by one person. The owner is responsible for all business decisions and operations.
- No minimum share capital is required to start a sole proprietorship.
- The owner must register with the Common Social Security Centre (CCSS) to make social security contributions for themselves, and, if applicable, for any employees they may hire.
Cost of setting up a Sole Proprietorship in Luxembourg
Although setting up a sole proprietorship in Luxembourg is relatively straightforward and cost-effective compared to other business structures, there are still certain expenses to consider:
- Registration fees with the Trade and Companies Register (RCS).
- Administrative costs related to obtaining necessary business licenses or permits.
- Depending on the nature of the business, it may be necessary to purchase insurance, such as professional liability insurance, particularly for professionals in regulated fields.
Taxation
One key aspect of a sole proprietorship is that the business itself is not taxed separately. All income generated from the business is considered personal income and is taxed accordingly under personal income tax rates. This can simplify the tax process, but it also means that any business profits will be taxed at the same rate as the owner's personal earnings.
Private limited liability company (SARL)
The Private limited liability company (SARL) is one of the most popular Luxembourg company structures, particularly designed for small and medium-sized enterprises (SMEs). This business model is appealing because it limits the liability of its shareholders to their contributions, meaning that personal assets are protected in case of business debts or legal claims. It's a great choice for entrepreneurs who want to minimize personal risk while running a business.
Who is it suitable for?
- Small and medium-sized enterprises (SMEs) looking for a flexible structure with limited liability.
- Family-owned businesses, where the management stays within a small group of stakeholders.
- Passport, valid for at least 3 months after the expiration date of the requested visa. With at least two blank pages.
Requirements
- A SARL can have a minimum of 1 and a maximum of 100 shareholders. This makes it a versatile option for both sole owners and small partnerships.
- To form a SARL, a minimum share capital of €12,000 is required. This amount must be fully paid in and deposited into a bank account in Luxembourg before the company is formally registered.
- The SARL must have its articles of association (company statutes) drafted and notarized, which outlines the company’s key operational guidelines and ownership structure.
Cost of setting up a SARL
Starting a Luxembourg company in the form of a SARL comes with several costs:
- A minimum of 12,000 euros in share capital.
- Notarial Fees
- RCS Registration Fees (105,91 euros)
- Administrative costs related to obtaining necessary business licenses or permits.
Taxation
In Luxembourg, a SARL must pay various taxes. These include a registration fee, property tax and business tax. Companies must also pay a net wealth tax on their assets and corporate income tax, which in 2024 ranges from 17% to 24.94%. SARLs must also submit periodic VAT declarations. The standard VAT rate in Luxembourg is 17%, one of the lowest in the EU.
Simplified limited liability company (SARL-S)
The simplified structure of the société à responsabilité limitée simplifiée has been introduced only in 2016, and quickly became a solution for first-time entrepreneurs, who need to start commercial activity immediately. The main advantage of such a form of company in Luxembourg is its seeming bureaucratic effortlessness: you need just 1 euro of capital to set up an SARL-S, and you can do it by private deed without the presence of a costly notary.
Who is it suitable for?
- Natural persons who aren't holding any shares in other SARL-Ss at the time. If you want or have set up another company in a different form, that's fine.
- Individual entrepreneurs who are working with limited support and want to start their own enterprise officially, or need the access to the market and selling.
- Craftsmen, traders, manufacturers and certain liberal professionals in Luxembourg.
Requirements
- A SARL-S can have a minimum of 1 and a maximum of 100 shareholders. This makes it a versatile option for both sole owners and small partnerships.
- To form a company, no minimum base capital is required. You can start from 1 euro of capital with this form of business.
- A SARL-S can be formed by a private deed without a notary. Just draft articles of association and you are good to start.
Cost of setting up a SARL-Simplified.
Starting a Luxembourg SARL-S company still comes with several costs:
- A minimum of 1 euro in share capital.
- Incorporation costs (notary/RCS): min. 1,500 EUR
- Administrative costs related to obtaining necessary business licenses or permits.
Taxation
In Luxembourg, a SARL-S also pay various taxes. These include a fixed registration fee, property tax and business tax. Companies must also pay a net wealth tax on their assets and corporate income tax, which in 2024 ranges from 17% to 24.94%. SARLs who registered for VAT, will submit periodic VAT annually, quarterly or monthly, depending on the turnover. The standard VAT rate in Luxembourg is 17%, one of the lowest in the EU.
Limited partnership (SCS)
The Limited partnership (SCS) is a partnership structure that involves two types of partners: limited partners, whose liability is limited to their contributions, and general partners, who have unlimited liability. This structure is particularly well-suited for investment projects or businesses where certain partners wish to limit their risk while others take an active role in management.
Who is it suitable for?
- Venture capital projects and other investment activities.
- Businesses where some partners prefer to limit their liability while others manage the day-to-day operations.
- Alternative investment funds (AIFs), which are commonly set up as SCS structures in Luxembourg due to their flexibility.
Requirements
An SCS must have at least two partners: one limited partner (whose liability is restricted to their capital contribution) and one general partner (who bears unlimited liability for the company’s obligations).
There is no minimum capital requirement.
The SCS is formed through a private deed, known as a partnership agreement. This agreement must specify key details, including:
- The company’s name and registered office
- The business purpose.
- A description of each partner’s contributions (capital or otherwise).
- The rights and obligations of the partners.
- How profits will be distributed.
- Governance mechanisms for decision-making within the partnership.
Notarization of the partnership agreement is not legally required, although some businesses choose to use a notary for additional formality.
Costs of setting up an SCS in Luxembourg
- RCS Registration Fees (14,61 euros).
- Administrative costs related to obtaining necessary business licenses or permits.
- Optional notary fees to be added.
Special limited partnership (SCSp)
The Special limited partnership (SCSp) is a type of limited partnership in Luxembourg that does not have a separate legal personality. This means that, from both a legal and tax perspective, the SCSp is not treated as a distinct entity apart from its partners. It consists of two types of partners: limited partners (passive investors) and general partners (who manage the business and have unlimited liability). The SCSp is widely used in investment funds, private equity, and venture capital structures due to its high degree of flexibility in profit distribution and business management.
Who is it suitable for?
- Alternative investment funds (AIFs) or structured funds.
- Venture capital, private equity, or real estate investment vehicles.
- Projects where investors wish to limit their liability to their capital contribution, while a group of general partners manages the business operations.
- Custom investment projects that require flexibility in governance and contractual terms.
- Businesses are looking for a fiscally transparent structure, where profits are taxed at the level of the individual partners, not the partnership itself.
Requirements
At least two partners are required: one limited partner (an investor whose liability is limited to their contribution) and one general partner (who is fully responsible for managing the business and has unlimited liability).
There is no minimum capital requirement, except that, depending on the activity, a certain minimum amount may be required.
The SCSp is formed through a private deed, also known as the partnership agreement. This document must include essential information such as:
- The company’s name and registered office.
- The business purpose.
- Descriptions of each partner's contributions (whether capital or otherwise).
- The rights and responsibilities of each partner.
- How profits will be distributed.
- Governance mechanisms for decision-making and management.
Unlike other corporate structures, notarization of the agreement is not required, although it may be used for formality.
Costs of setting up an SCSp
- RCS Registration Fees (105,91 euros)
- Administrative costs related to obtaining necessary business licenses or permits.
- Optional Notary Fees
Taxation
One of the major advantages of an SCSp in Luxembourg is its fiscal transparency. The SCSp itself does not pay corporate taxes in Luxembourg. Instead, profits are distributed among the partners, and each partner is individually responsible for paying taxes based on their share of the profits. This makes the SCSp particularly attractive for investment funds and projects where tax efficiency is particularly important.
Public Limited Company (SA)
A Public Limited Company (SA) is similar to a Private limited liability company (SARL), with the key distinction being that an SA can issue shares that are publicly traded on a stock exchange. This makes it an ideal structure for larger organizations, although it can also be used by smaller businesses with a few initial shareholders. Shareholders in an SA are only liable up to the amount of their investment, making it a popular choice for businesses seeking to raise capital while limiting individual liability.
Who is it suitable for?
- Large or medium-sized companies looking to raise capital from investors.
- Businesses planning to go public or list their shares on a stock exchange in the future.
- Companies seeking a flexible structure that allows for a larger number of shareholders.
Requirements
- An SA can be formed with a minimum of one shareholder.
- The SA requires a minimum share capital of 30,000 euros.
- The company's articles of association must be drafted and formalized by a notary.
Costs of establishing an SA
- A minimum of 30,000 euros in share capital.
- Incorporation costs (notary/RCS): min. 1,500 EUR
- Administrative costs related to obtaining necessary business licenses or permits.
Taxation
A Société Anonyme (SA) company in Luxembourg is taxed on its business. These include a registration fee, property tax and business tax. SA companies pay a net wealth tax based on their assets and corporate income tax, which ranges from 17% to 24.94%. They must also submit regular VAT returns. Luxembourg has the lowest standard VAT rate in the EU at 17%.
Partnership limited by shares (SCA)
The Partnership Limited by Shares (SCA) is a hybrid business structure combining elements of a limited partnership and a public limited company. Similar to the Limited partnership (SCS), the SCA allows for both limited partners (who invest in the company) and general partners (who manage the business). However, in an SCA, the limited partners hold shares in the company, making it a more flexible option for attracting capital from investors. This structure is particularly suited for complex investment vehicles or large-scale projects.
Who is it suitable for?
- Investment funds and complex structures looking to raise capital from investors while keeping management control in the hands of a select group of partners.
- Large-scale projects or funds that need a flexible structure to bring in various shareholders.
- Businesses seek a balance between limited liability for shareholders and the active management of the company by a core group of general partners.
Requirements
- An SCA requires at least two partners: one limited partner (shareholder with limited liability) and one general partner (responsible for the management and bearing unlimited liability for the company’s obligations).
- The SCA requires a minimum share capital of 30,000 euros.
- The company’s articles of association must be formalized by a notary.
Costs of Establishing an SCA
- A minimum of 30,000 euros in share capital.
- Incorporation costs (notary/RCS): min. 1,500 EUR
- Administrative costs related to obtaining necessary business licenses or permits.
Taxation
A Société en Commandite par Actions (SCA) in Luxembourg is subject to various taxes. These include a registration fee, property tax and business tax. SCAs are also liable for net wealth tax and corporate income tax. The tax rate ranges from 17% to 24.94%. The company must also submit VAT declarations regularly. Luxembourg's standard VAT rate is 17%, the lowest in the EU.
How to open a company in Luxembourg in 2025
We have already seen some of the different types of companies, now let's take a step-by-step look at how to open a company in Luxembourg. Since registering a business in Luxembourg requires multiple steps and can take some time, it is important to plan everything and above all have a good understanding of the process.
1. Create a business plan
Before beginning any legal or administrative steps, it’s crucial to establish a solid business plan. This document outlines the objectives of your business, its operational model, target market, marketing strategies, organizational structure, and financial projections. A well-prepared business plan serves as your roadmap, helping guide decisions and attract potential investors or secure financing. It also allows you to assess the viability of your business and foresee challenges and opportunities.
2. Choose the structure for your business
Selecting the most appropriate legal structure for your company is critical. As discussed in the previous sections, you can choose from a variety of company types, such as SARL, SA, SCS, or SCSp, among others. Each structure has different requirements, levels of liability, and capital investment, so make sure to choose the one that best fits your business needs.
3. Obtain the necessary permits
Some forms of businesses in Luxembourg must obtain the appropriate governmental permits. If your company will engage in commercial, skilled crafts, industrial activities or certain liberal professions, you acquire a business permit. This ensures that your business complies with Luxembourg's legal and regulatory requirements.
You can apply for this permit online via MyGuichet.lu from your professional space or send a postal application to the General Directorate for SME, Craft and Retail. This process is vital to ensure that your business is legally permitted to operate in Luxembourg.
General Directorate for SME, Craft and Retail:
- Address: B.P. 535 L-2937 Luxembourg
- Phone: (+352) 24 77 47 00
- Working Hours: Monday to Friday from 9:00 to 12:00 and from 13:30 - 16:30
4. Choose a company name from available
Before you can officially register a company in Luxembourg, you must check the availability of your chosen business name. This is done by submitting a request for a certificate of name availability to the Luxembourg Business Registers (LBR) electronically. It’s important to ensure that your company name is unique and not already in use by another business.
5. Draft the Articles of Association
The articles of association are the legal documents that define the internal rules of the company, the rights and obligations of the shareholders, and the management structure. These articles should include:
- Company name and legal form.
- Registered office.
- Business purpose.
- Share capital and how shares are distributed among shareholders.
- Management structure (directors, boards, etc.).
For certain legal structures, the articles of association must be drafted and formalized by a notary. The assistance of a professional is strongly recommended for drafting the articles of association.
6. Sign it with notary, if necessary for your structure
If the legal structure of the company requires notarial formalization (e.g., SARL or SA), the founding shareholders must sign the articles of association in the presence of a notary. This step is essential to officially establish the company.
7. Open a business bank account
For companies such as SARL or SA, you must open a bank account in the name of the company being formed to deposit the required minimum share capital. Once the funds are deposited, the bank will issue a certificate of deposit, which is necessary for the company’s official registration.
8. Register with RCS
Once the articles of association have been finalized, the company must be registered with the Luxembourg Trade and Companies Register (RCS). Registration with the RCS is a mandatory step in the company formation process and makes the business officially recognized under Luxembourg law.
9. Register with CCSS
If your business will employ workers, you must register it with the Common Social Security Centre (CCSS). This registration is necessary to manage social security contributions for both employees and, if applicable, the business owner or managing director.
Centre commun de la sécurité sociale
- Address: 4 Rue Mercier, Gare Luxembourg
- Phone: (+352) 40 14 11
- Website: ccss.public.lu
- Working hours: Monday to Friday from 8:00 to 16:00
10. Register for VAT (if applicable)
If your company expects to generate more than 35,000 euros per year in revenue, you are required to register for Value Added Tax (VAT) with Luxembourg’s tax authorities. VAT registration ensures compliance with Luxembourg’s tax laws and enables the company to collect and remit VAT on sales and services.
Administration de l'enregistrement, des domaines et de la TVA
- Phone: (+352) 24 78 08 00
- Website: aed.gouvernement.lu
- Working hours: Monday to Friday from 8.30 to 12.00 and 14.00 to 16.00
These steps will help you register your company in Luxembourg more easily. The process is simple if you have the right information and prepare well.
