Encouraged by the economic policy of Luxembourg, e-commerce is an activity that tends to grow, offering products and services online. Internet businesses in Luxembourg are regulated by the Law on e-commerce issued on 14 August 2000 by the government.
The main problem when starting an internet business in Luxembourg consists in the taxation procedure, which may raise ambiguity.
The criterion of the fixed place of a business is quite easily to be noticed in case of a permanent establishment for companies which have a traditional commercial or industrial activity.
But this same criterion is more difficult to implement when it comes to characterize the presence of a permanent establishment for tax purposes of a company which carries on business under e-commerce.
Companies that operate commercial websites are those which sell products via the internet. In this case these companies maintain a mostly stock and, in any case, they have a central purchasing or logistics center, whose location will feature the presence of a permanent establishment for tax purposes, including for VAT purpose.
Companies that operate service sites are those that offer services that can be viewed or downloaded via the Internet on the basis of a tax. Companies that offer such services may have a very small physical presence, since both the nature and the content of their activity are essentially digital.
And often the most tangible element of these companies is the only computer server which is hosted on the website.
Different regulations related to accountancy
The procedure of incorporating and registering an internet business in Luxembourg is not different from the process involved for a regular company. However, there are still certain rulings that regulate the company's activity and taxation. In the accounting field, the law on e-commerce provides that, with the exception of the balance sheet and profit and loss account, the other accounting documents and information can be kept as a copy.
The internet businesses in Luxembourg are sustained by several projects implemented by the public authorities in order to facilitate on-line administration and offer a more transparent work-frame. In this sense, the main important legislative acts in the field were issued in 2000, when Luxembourg became the first country that introduced the European directive on e-commerce and electronic signatures and adopted a law on e-commerce, in 2001 when Luxembourg adopted the law on electronic signatures, in 2002 when a law on protection of personal data was implemented and in 2003 when it was adopted a VAT Directive for e-commerce.
Moreover, Luxembourg is ranked as the fourth country in the world by the number of secure servers per million inhabitants. This is a relevant and important information for entrepreneurs willing to develop an internet business in Luxembourg.
Our lawyers in Luxembourg are able to provide full information and customized advice for starting an internet business in this country.
Contact our specialists in company formation in Luxembourg, who have a large experience in finance and international business.
Set up an appointment with us at (+352)278 617 15. Alternatively you can incorporate your company without traveling to Luxembourg.