Start Your Business in Luxembourg: Complete Guide for Entrepreneurs and Investors

Learn how to start a business in Luxembourg. Steps, costs, tax benefits, permits, and legal requirements explained by experts.

How to start your Business in Luxembourg

Starting a business in Luxembourg is a strategic choice for entrepreneurs, investors, and professionals who want access to the EU market, a stable tax environment, and a multilingual workforce.

Whether you are a freelancer, a startup founder, or an international group setting up a subsidiary, Luxembourg offers a transparent legal framework, investor-friendly policies, and efficient incorporation processes.

In this guide, we cover everything you need to know about how to start your business in Luxembourg: from legal structures and permits, to accounting, tax registration, and ongoing compliance.

Why Start a Business in Luxembourg?

Strategic EU Location

Located at the heart of Europe, Luxembourg provides direct access to 450+ million EU consumers and is a hub for cross-border trade.

Attractive Tax System

Corporate tax: ~23.87% effective rate (2025). (Tax Measures for 2025: Strengthening Luxembourg’s Global Financial Hub).
Extensive double tax treaty network (80+ countries).
VAT-friendly rules for SMEs and cross-border operations.

Stable Political and Economic Environment

AAA-rated economy.
Strong financial ecosystem with 120+ international banks.
Investor protection under EU law.

Multilingual Workforce

Luxembourg’s business culture thrives in English, French, German, and Luxembourgish, making it an ideal environment for international entrepreneurs.

Steps to Start Your Business in Luxembourg

Step 1: Define Your Legal Structure

Popular forms include:

SARL (limited liability company) – most common form.
SARL-S (simplified SARL) – minimum capital from €1.
SA (public limited company) – often used by larger groups.
ASBL (non-profit organisation).

Tip: SARL-S is perfect for freelancers and small startups, while SOPARFI or SA structures are better for holding companies and investors.

Step 2: Business Permit & Authorisation

Under the Law of 2 September 2011, many activities require a business permit (autorisation d’établissement) from the Ministry of Economy. Requirements:

Professional qualifications or diploma.
Clean criminal record (non-faillite certificate).
Professional integrity.

Step 3: Draft Articles of Association

The notary prepares and notarises your company statutes. This step is mandatory for SARL and SA structures.

Step 4: Register with RCS

All companies must register with the Registre de Commerce et des Sociétés (RCS). This makes the company legally visible.

Step 5: Tax & VAT Registration

Register with the Administration des Contributions Directes (ACD) for corporate income tax.
Apply for a VAT number with the Administration de l’Enregistrement et des Domaines (AED).

Step 6: Social Security (CCSS)

If you employ staff or operate as self-employed, registration with the Centre Commun de la Sécurité Sociale (CCSS) is mandatory.

Step 7: Open a Business Bank Account

Luxembourg banks require KYC documentation, proof of business plan, and compliance checks.

Costs of Starting a Business in Luxembourg

Expense	Estimated Cost
Notary fees (SARL)	€1,000 – €2,000
RCS registration	€75 – €150
Business permit	€24 – €50 (state fee)
Accounting setup	€500 – €1,500
Bank account & KYC	Variable
Total initial cost (SARL-S)	As low as €1 + fees

Taxation & Accounting Obligations

Corporate Taxes

Corporate Income Tax (CIT): 17% (+ municipal surcharge ~6-7%).
Net Wealth Tax: for holding and financial companies.
Withholding taxes: dividends often exempt under EU Parent-Subsidiary Directive.

VAT rates Luxembourg

Standard rate: 17% (lowest in the EU).
Reduced rates: 3%, 8%, 14% depending on goods/services.

Accounting & Reporting

Annual accounts under Lux GAAP or IFRS.
Filing with RCS within 7 months of year-end.
Audit requirement for large entities.

Advantages of Starting in Luxembourg

Low VAT rate (17%) – competitive across EU.
Fast incorporation process – SARL-S in days.
Business-friendly environment – recognised financial hub.
Cross-border appeal – great for investors in France, Belgium, Germany.

Common Challenges and How to Overcome Them

Banking setup: strict KYC → work with professionals.
Permit delays: avoid incomplete applications.
Regulatory complexity: expert accounting guidance reduces risks.

FAQs – Start Your Business in Luxembourg

1. How long does it take to start a business in Luxembourg?

Incorporation can take 2–3 weeks, or just a few days for an SARL-S.

2. What is the minimum capital for a SARL-S?

From €1 up to €11,999, making it accessible to startups.

3. Do I need a business permit?

Yes, for most activities. The Ministry of Economy issues the permit under strict conditions.

4. Can foreigners start a business in Luxembourg?

Yes, Luxembourg welcomes both EU and non-EU entrepreneurs, subject to permit and KYC requirements.

5. What are the main tax benefits?

Access to double tax treaties, participation exemption regime, and one of the lowest EU VAT rates.

Expert insight is crucial before to start your business in Luxembourg

Starting a business in Luxembourg is more than a legal formality, it is a gateway to the European market, a favourable tax regime, and a highly stable business environment.

With the right guidance, you can incorporate quickly, remain compliant, and focus on growing your venture.

At Financial Services Accountant Luxembourg, we provide end-to-end support: incorporation, VAT, accounting, payroll, and compliance.

Contact us today to launch your business with confidence.

START YOUR BUSINESS IN LUXEMBOURG