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Key Considerations For Starting A Business In Luxembourg In 2024

Luxembourg

Luxembourg, a small country in the heart of Europe, is also one of the continent’s most dynamic economies.

It has drawn in a number of businesses due to its hard-working population, great location and competitive corporate income tax. Here, we take a look at everything you need to consider before starting a business in Luxembourg, including how to set one up.

Let’s take a look…

 

What Are The Benefits Of Setting Up A Business In Luxembourg?

 

There are a number of benefits to setting up a business in Luxembourg. Some of these include:

 

Location

Luxembourg has direct air links to over 75 destinations around Europe, making it a great hub for business travel. Positioned in the middle of France, Germany and Belgium, the country has a direct connection to 3 strong European economies.

 

Political Stability & Economy

Luxembourg is known for its political stability and strong economy. In fact, the country has such promising opportunities that it attracts commuters from France, Belgium and Germany every day.

 

Competitive Corporate Taxes

Luxembourg offers a competitive corporate tax rate compared to other European countries. To put this into perspective, their corporate tax rate sits between 15-17%, whereas in the UK, this is 25%.

 

Skilled Workforce

Luxembourg’s population is both highly educated and multilingual, making it easy to find and recruit top talent. This has led it to be named one of Europes ‘startup nations’ – boasting around 500 startups despite its population of just over 650,000.

 

What To Consider Before Moving To Luxembourg For Business

 

Before deciding to relocate to Luxembourg for business, it’s important to know what you’re getting yourself in for. You should consider:

 

Cost of Living

Luxembourg is known for its high cost of living, with a family of four needing between €6,000 – €8,000 to have a good quality of life.

However, what you get for this is a very high quality of living, with great healthcare, education and public services. Additionally, given the minimum wage is much higher than other countries, this can help balance the higher costs.

 

Multilingual Environments

Luxembourg is multilingual, with the population speaking Luxembourgish, French and German as the country’s official languages.

When it comes to business, many companies work in English, especially if they are dealing with companies in other countries. Knowing multiple languages can be helpful for business and networking.

 

Strict Laws Around Employment

Luxembourg is highly bureaucratic, with strong laws around employees and what is expected from employers. Understanding these is important and having a professional on hand to help you navigate them can be a big help.

 

Step-by-Step Process To Starting A Business In Luxembourg

 

If you are a Luxembourg local, setting up a business is relatively straightforward. However, if you live outside of the EU or EFTA, you’ll need a residents permit before applying.

If you have this ready to go, then here are a few key elements to consider:

 

1. Choosing Your Business Structure

The first step in starting a business in Luxembourg is choosing the right legal structure for your business.

Some of these options include include:

 

 

2. Register Your Business

Once you have chosen the structure of your business, the next step is to register it. All businesses need to be registered with the Trade and Companies Register (Registre de Commerce et des Sociétés – RCS).

Whilst the process for a sole trader is relatively simple, limited companies require a few more steps. It’s worth noting that a business permit is required before submitting, so make sure you have that to hand. In general, registration includes:

 

3. Get Your Business Licence

Most businesses in Luxembourg need a business permit issued by the Ministry of the Economy. To get the permit, you will need to provide:

Certain industries may also need other permits, for example those in healthcare or food and drink. If you are unsure if your company will need any additional documentation, visit the relevant website.

 

4. Register For Taxes

After applying for your business permit, register for tax through the Luxembourg Inland Revenue (Administration des Contributions Directes – ACD).

Whilst they may get in touch automatically after a business is registered, it’s best to stay on top of the process and get your application in early.

You will need to register for:

 

5. Open A Corporate Bank Account

Opening a corporate bank account is an important step, especially for companies that will need to deposit a minimum investment. Luxembourg is well set up to offer a huge number of options for businesses, so don’t worry too much about finding the right option.

You’ll need this account when you register, although it will become useful when you start operating too.

 

6. Hire Employees

If you are planning to hire employees, it’s important that you get to know the country’s labour laws.

 

Starting A Business In Luxembourg

 

Starting a business in Luxembourg can be an amazing opportunity to work in a dynamic economy with a highly skilled workforce. However, given the laws and regulations, it does require a lot of planning to sail through the process smoothly.

Either way, with careful preparation you can make sure you set your business up for success from the start. Good luck!

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