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Company Formation Luxembourg



Luxembourg legislation related to foreign investments

Updated on Friday 08th December 2017

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luxembourg_legislation_related_to_foreign_investments.jpgThe government of Luxembourg understands the importance of foreign investments and encourages investors to open a company in Luxembourg or to extend their existent business by opening a branch or subsidiary in Luxembourg.
Luxembourg has not set any particular legal regimes affecting foreign investments, except for the tax-exempt “holding” companies and collective investments funds. However, the government offers assistance with guarantees, cash, tax incentives, subsidized loans and with development and construction projects. The country offers customized investment motivations especially for new ventures. They include offer of land with positive conditions at one of the park or national industrial parks, already equipped with the necessary infrastructure that can support the development of a business.
Why invest in Luxembourg?
Because the internal policies of Luxembourg allow foreign investors to rapidly start doing business in Luxembourg, it has made the country one of the most open economies in the world, enjoying a very attractive taxation system. The Government of Luxembourg has minimal exchange controls and the foreign capital can circulate freely.  However, one of the disadvantages is that the country is known to have a high cost of living as well as a high level of consumer demands.
Government Measures to Motivate or Restrict FDI
The government of Luxembourg took measures to attract business investors. Among those measures are the subsidies granted to SMEs, meaning retail, catering or hotels, through the National Society of Investment Credit (SNCI). In addition, it offers up to 25% exemptions from corporate income tax and commercial tax, for 8 years, for new companies open in Luxembourg through foreign investments.
Procedures related to foreign investments
There are special procedures a company has to follow in order to start doing business in Luxembourg. Regardless of the type of investment chosen, all commercial and economic activities in Luxembourg have to follow the same formalities, such as: registration at the Companies’ Trade Register or application for a VAT number. They are also obligated to obtain an establishment authorization for commercial activities.


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