Entrepreneurs, investors and legal entities that have decided to open a company in Luxemburg based their decision on the business-friendly environment and the development of several government initiatives to attract and support them. Luxembourg is a small country, with a central location in Europe, but with a great potential when it comes to the advantages it offers for those interested in starting their own business here.
Not only is Luxembourg considered a gateway to large European markets, it’s also an attractive business location due to the political and economic stability, skilled and multilingual workforce, favorable tax and legal environment, highly developed infrastructure and connectivity and excellent ratings obtained from the most important credit rating agencies. The main headquarters of large multinationals are located in Luxembourg, but the country has also become an easy accessible startup hub. Here are the required steps to open a company in Luxembourg:
Open a bank account
The bank account is required to deposit the minimum required share capital to open a company in Luxembourg and it should be one the first steps to take because, depending on the bank, KYC procedures may take some time.
Select a name for your company
To open a company in Luxembourg, there are no specific regulations regarding its name, but it does have to be unique. To check if a company name is available, a request can be sent to the Trade and Companies Register.
Choose the business structure of your company
There are several business structures to choose from, but the most common ones in Luxembourg are SARL (limited liability company) and SA (public limited company). The main differences between the two business structures are the minimum required share capital – 12,500 euros for the SARL and 31,000 euros for SA, the obligation to appoint an auditor in case of SAs, restrictions regarding transfer of shares and rules applicable to the company’s board.
Draft the Articles of Association
These are the most important documents required to open a company in Luxembourg because they contain the fundamental charter of the company which sets out its operating rules. The Articles of Association allow the company to become a legal entity and to make business commitments to third parties.
Deposit the share capital
The share capital must be deposited to the bank. The amount depends on the type of business structure selected to open a company in Luxembourg, as the minimum contributions varies for SARLs and SAs. In addition, the amount of cash invested in the company can also vary.
Receive a certificate from the bank
After the share capital is deposited the bank will issue a certificate to be used as a confirmation to the notary that the share capital referenced in the Articles of Association has been deposited and the company can be incorporated. The deposited capital will be blocked.
Notarize the Articles of Association
The drafted documents are presented to a notary who will notarize and record them, which will basically complete the company formation procedure. The notary sends the recorded documents to the Trades and Companies Register to have them registered and afterwards they will be published in the Official Bulletin.
Send a certificate to the bank
Once a company is incorporated, the notary issues a deblocking certificate which is sent to the bank. This certificate is used by the bank to release the deposited funds and make them available to the company.
Apply for business license – if required
Usually, there are no special licenses required to open a company in Luxembourg, but companies who deal with commercial activities, certain specific professions and skilled craft trades must obtain a business license. The license is granted only if there is a registered location in Luxembourg which has the necessary infrastructure for the nature and scale of the activity in question.
10.Apply for a VAT number – if required
The value added tax is applied on al economic activities. Transactions may also be subject to VAT if they are carried out against payment or if it’s required by law. As a general rule, all companies must register for VAT by submitting a declaration to the Land Registration and Estates Department.
Start your business activities
Once you have completed all the required steps to open a company in Luxembourg, you can start your business activities within the newly-formed company.