Many foreign investors choose to open a company in Luxembourg because the country has various business opportunities to offer. Investors are attracted by the stable economy in Luxembourg which offers very good chances for small, medium and large businesses to develop and grow from year to year. Luxembourg is also a founding member of some of the largest organizations in the world, such as the Organization for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO). Our company formation agents in Luxembourg can offer detailed information about how you can open a company in Luxembourg.

Business advantages offered by Luxembourg

Luxembourg is a small country with large potential. It has an open and stable economy as well as a good legal framework that encourages foreign investors and allows foreign entrepreneurs to benefit from the same rights as local ones. Its position in Europe is favored by its geographical location but also by its involvement in the founding and functioning of the European Union. The most important characteristics that make international entrepreneurs invest in Luxembourg are:

• a stable economy and good GDP performance;
• excellent location in Europe that allows for good connectivity;
• multilingual workforce and business environment: there are three recognized languages in the country – Luxembourgish, French and German;
• good tax system and legal framework for investments;
• good infrastructure: transport, development and ICT structures;
• good quality of life.

Here is an infographic that explains more about why you should invest in Luxembourg:

Business sectors open for foreign investments in Luxembourg

Luxembourg welcomes foreign direct investments and there are a large number of business sectors that are attractive for foreign entrepreneurs:

• the financial sector;
• shipping and logistics;
• automotive and aerospace;
• ICT (information and communication technologies) and high-tech;
• research and development.

The company incorporation process is easy and it is a great reason why investors choose to open a company here. Each type of company needs to apply for a business permit with the General Directorate for SMEs and Entrepreneurship belonging to the Ministry of Economy. Our company formation agents in Luxembourg can help you apply for a regular business permit and for additional specific ones, required for some liberal professions. After the company has the necessary permits for functioning, it is registered with the Luxembourg Trade and Companies Register. Additional steps are registration with the social security (if hiring employees), renting or purchasing an office space in Luxembourg and registering with the tax authorities.

FDI in Luxembourg

The 2020 Doing Business report issued by the World Bank ranked Luxembourg 72nd out of 190 economies in the world and despite the economic uncertainties at macro-economic level, the Grand Duchy remains one of the most attractive European countries for foreign direct investment (FDI). This is partially due to the fact that the Government recently enabled several facilities for FDI. As for the total FDI stock in Luxembourg, nearly USD 128 billion were registered in 2019. Below you can find information about the business facilities adopted by the government in Luxembourg:

• tax benefits;
• subsidies for purchasing equipment;
• advantageous financing options;
• capital investment deductions;
• the creation of new construction projects in order to raise this sector.

Our local agents invite you to watch a video about the reasons to invest in Luxembourg:

Legislation related to foreign investments in Luxembourg

Luxembourg sustains the foreign investments through all kinds of incentives and encouragements for which there is no particular legislation, but a complete control and responsibility from the Board of Economic Development in Luxembourg. It is important to know that both local and foreign investors have equal rights when it comes to making investments in Luxembourg and there is no discrimination in this matter. Foreign and local investors can open limited liability companies, general and limited partnerships, joint ventures, joint-stock companies or cooperative companies as long as they respect the Company Act in Luxembourg. All the aspects and formalities for starting a business in Luxembourg can be explained by our company formation specialists in Luxembourg who can also act as representatives of your company in Luxembourg.

Can I list the company on the stock exchange in Luxembourg?

Yes, it is quite easy to list on the stock exchange in Luxembourg, the largest in Europe and of high importance on an international level. LuxSE, as it is known, is quite appreciated by foreign investors in Luxembourg who need to respect a few requirements for listing the company on the stock exchange, such as providing the needed capital, details about the finances of the firms and a board of directors with experience in this field. The listing conditions for companies in Luxembourg are imposed by Commission de Surveillance du Secteur Financier that acts in compliance with the Rules and Regulations of the Luxembourg Stock Exchange. Many foreign investors are attracted by LuxSE when opening or developing a business in Luxembourg. All the conditions for listing on LuxSE can be explained by our company formation specialists in Luxembourg. If you want to invest in Luxembourg, feel free to talk to our representatives.

What are the most attractive investment fields in Luxembourg?

The investment fund sector in Luxembourg is extremely appealing to international financiers who can easily set up retail or non-retail funds, hedge funds or specialized investment funds in Luxembourg. Hedge funds are mostly used by foreign investors in Luxembourg and these can the established as private or public limited liability companies. UCITS, SIFs, SOPARFI or UCIs are the type of regimes under which a hedge fund can be implemented. For instance, SIF is the Specialized Investment Fund, an important investment tool in Luxembourg which is preferred by many investors from overseas. SIFs can be established by experienced investors with huge portfolios, but it is not an exception. Having no taxes on capital gains and incomes represents a massive advantage for foreign entrepreneurs wanting to establish SIFs in Luxembourg. Complete information about the investment fund industry in Luxembourg and about how you can set up a fund can be provided by one of our consultants in Luxembourg.

Advantages of ready-made companies in Luxembourg

A reason why investors decide on purchasing ready-made companies in Luxembourg relates with the fact that such company is already incorporated with the entitled authorities, it has no debts and can be instantly used. Vintage companies or shelf companies are quite popular among entrepreneurs and that because these have no activities, are already registered and present a high level of credibility in front of financial institutions. Even if such a company has no debts or liabilities, individuals looking to purchase a vintage company can ask for due diligence procedures for a better verification of the firm. In terms of registration of a ready-made company in Luxembourg, there is no need to travel to this country and that because the incorporation can be made with the help of our company formation agents in Luxembourg. Let us help you invest in Luxembourg and handle all the formalities and procedures involved for company formation.

Why relocate your company in Luxembourg

The advantageous tax structure, the multitude of business opportunities and the economic stability are a few of the important factors that stand at the decision of company relocation in Luxembourg. The skilled and multilingual workforce available in Luxembourg is appealing to foreign business owners who can decide on transferring their activities in this country. According to the Company Act in Luxembourg, there are a few important requirements and conditions to consider when relocating a company in Luxembourg, as follows:

The board of managers must decide on the relocation of the company in Luxembourg.
Notarized copies of the company documents are needed.
The registered office in Luxembourg needs to be settled.
The minimum share capital for opening a business in Luxembourg needs to be deposited in a local bank account.

In matters of technical steps related to company relocation in Luxembourg, business owners must adopt the corporate structure, appoint the board of managers (if the existing one won’t be available), deregister the business from the country of origin and then have a first meeting at the new business location. All the details about how to relocate your company in Luxembourg and about the advantages of such decision can be provided by one of our company formation agents in Luxembourg.

The protection offered by double tax treaties in Luxembourg

Luxembourg has an appealing tax regime and even so, the support and protection of the double tax conventions signed with countries worldwide strengthen the business climate in this country. The double tax treaties have been created to protect international investors from paying the taxes twice on incomes. The capital gains, the royalties and dividends are covered by the double taxation treaties signed by Luxembourg with countries like Malta, Romania, Georgia, Mexico, Barbados, Spain, South Africa, Greece, Slovakia, Germany, Qatar, Taiwan, the Netherlands, the Czech Republic, Ireland, Indonesia, Austria, Vietnam, China, Hungary, Lithuania, France, Turkey, Thailand, Macedonia, Israel, Sweden, the UK, the USA, Switzerland, Brazil or Belgium. Below you can read some information, statistics, and facts about the business, economy and the investment direction in Luxembourg:

The FDI stock stood at USD 128 billion in 2020 in Luxembourg.
According to the “2020 Doing Business” report presented by the World Bank, Luxembourg ranked 72nd out of 190 worldwide economies.
There are more than 155 banks listed in Luxemburg, making this sector quite appealing.
8 is the index of shareholders’ power for Germany and companies established in Luxembourg.

Luxembourg legislation related to foreign investments

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 offers 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.

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. If you want to know more about how to invest in Luxembourg, you can talk to our specialists.

Financial help

The National Credit and Investment Corporation (SNCI) may offer capital grants and long-term loans. The government may also offer capital grants. Certain projects may be funded and small and medium-sized companies may receive support. Activities focused on new products: research, development and innovation may be financially aided, as well as services and processes, environmental protection and efficient energy utilization.

Most Attractive Investment Fields in Luxembourg

The legislation favoring foreign investment has turned the funds industry into one of the most appealing sectors of the economy. Many foreign enterprisers come here in order to set up investment funds. Our company formation agents in Luxembourg can offer more information about other attractive investment industries in the Grand Duchy.

The Luxembourg investment fund industry

With a legislation tailored to the needs of foreign investors, Luxembourg transformed the investment funds sector into the most attractive industry in this country. Among the types of funds one can set up here are:

specialized investment funds;
hedge funds;
retail funds;
non-retail funds.

These types of funds cater for the needs of both specialized and regular investors. More about how to invest in Luxembourg can be discussed with our team.

The asset management industry in Luxembourg

With such developed investment funds field, Luxembourg has also turned its attention towards providing the best services to entrepreneurs which is why asset management has also become a very attractive investment industry in a short time. When adding the experienced and skilled workforce to the mix, Luxembourg has enabled the development of several sectors around the investment funds one.

The private banking sector in Luxembourg

Another appealing industry in Luxembourg is the private banking one. With a pro-business legislation, Luxembourg has provided important investment opportunities for those seeking to open a company in the banking industry, especially in the private one. Private banks in Luxembourg currently hold nearly 40% of the assets of investors in the world, according to the latest survey carried out by one of the most important magazines in the industry.

The wealth management industry in Luxembourg

Dedicated mostly to private rich individuals, the wealth management industry is currently one of the most attractive investment fields in Luxembourg. Starting 2013, the wealth management industry registered a steady growth with the rising number of clients directing their attention towards Luxembourg.

Top 10 reasons for investments in Luxembourg

It is a known fact that Luxembourg is a powerful financial center that provides a proper environment for business development. Below you can find the top 10 reasons why you should invest in Luxembourg:

Luxembourg is a founding member of the European Union and this aspect provides lots of confidence when it comes to investments and business development. Many European companies already prosper with their activities in this country.
The stable political and social climate of Luxembourg, plus the strong economy play a major role when it comes to foreign investments. International entrepreneurs do appreciate a country that offers strength from this point of view.
Luxembourg is the main investment fund in Europe and second in the world after the USA. Foreign investors are attracted by Luxembourg in this direction.
Being protected from an investment point of view is important for foreigners wanting to start their activities in Luxembourg.
The regulatory framework of Luxembourg is highly beneficial. The authorities continue to improve the legislation and respond to the needs of the modern business market.
UCITS or Undertakings for Collective Investment in Transferable Securities has a viable framework, quite appealing to entrepreneurs from abroad.
The taxation regime in Luxembourg is attractive and advantageous for business owners or for future entrepreneurs who want to be protected in this field. Profits exceeding EUR 15,000 are subject to a corporate income tax of 21% rate.
The infrastructure and transportation are highly developed in Luxembourg and represent significant benefits for businessmen from overseas. Such aspects are normally verified and appreciated from the start.
The ease of doing business is on the list of investors who need to establish the activities without complexities in matters of formalities. Luxembourg offers this essential advantage in the business field.
There is no discrimination when it comes to the business made by domestic or international entrepreneurs. Everyone has equal rights and can easily start the operations without particular restrictions or barriers. More about how to invest in Luxembourg and start a business can be discussed with our company formation agents in Luxembourg.

Some business operations you can start in Luxembourg

The wide range of activities in Luxembourg means choosing the right sector for further business development and profits. You might be attracted by the following business ideas you can implement in Luxembourg.

• A trading company in Luxembourg can be a great business idea. The country has worldwide business connections, so accessing international markets is quite simple. A SARL established with a minimum share capital of EUR 12,500 is quite recommended for this kind of business.
• An internet business is also a good option for entrepreneurs wanting to thrive in this sector in Luxembourg. You can develop your activities with the help of an online shop that can be registered without difficulties.
• Starting an insurance company is another great business idea in Luxembourg. There are many benefits for such activities and entrepreneurs can rely on a protected business climate and a solid insurance market appreciated worldwide.
• Entrepreneurs might consider opening an IT company in Luxembourg because this important sector is highly developed and continues to improve each year. You can also invest in an IT company in Luxembourg.
• The real estate in Luxembourg is another appealing business sector for international entrepreneurs. The field continues to expand and absorb a large percentage of foreign investments each year. Opening a company in the real estate sector in Luxembourg is straightforward.
• The tourism sector is prosperous in Luxembourg, so opening a real estate agency might be an advantageous business for domestic and foreign entrepreneurs. One must pay attention to the necessary licenses and permits for this kind of business.
• A company for rental and leasing in Luxembourg is another interesting and advantageous type of business. Just like in the case of most activities, SARL represents the appropriate business structure in Luxembourg, due to simplified bureaucracies and other advantages.
• A financial company in Luxembourg is always a great business idea because Luxembourg is one of the most appreciated and powerful financial centers in the world. The legal framework sustains such businesses 100%.
• A cryptocurrency company in Luxembourg can also be on the list of entrepreneurs who want to generate good profits in this field. The support for new technologies development is offered by the authorities.
• An e-commerce business is another great and viable idea that can be measured by international entrepreneurs in Luxembourg. Online stores continue to develop at a fast pace on a daily basis.

FAQ about business and investments in Luxembourg

1. How fast can you incorporate a business in Luxembourg?

The registration process of a company in Luxembourg is a simplified process that allows foreign and local entrepreneurs start their businesses in a fast manner. SARL or the limited liability company is the proper business structure for foreigners.

2. What are the main advantages of the business climate in Luxembourg?

The good quality of life, the stable economy, the appealing financial sector, the good tax system and infrastructure are among the solid points of Luxembourg and the reasons why international entrepreneurs choose this country for investments. The experienced and multilingual workforce available in Luxembourg is also a great option for foreign investors wanting to establish their business presence in this country.

3. What are the main business sectors for investments in Luxembourg?

The financial sector, research & development, logistics, shipping, ICT, automotive and aerospace are among the sectors in which most of the investments are directed. It is good to know that the Ministry of Economy and particularly the General Directorate for SMEs and Entrepreneurship in Luxembourg issues the business permits for foreign companies in this country.

4. Is the tax structure in Luxembourg advantageous for foreign investors?

Yes, the tax regime in Luxembourg is quite appealing to foreign investors because they can benefit from capital investment deductions, financial support for the purchase of equipment, etc. The corporate income tax of 15% applies to taxable incomes of no more than EUR 175,000. As for the VAT rate, this is set at 17% rate in Luxembourg.

5. Is it hard to set up investment funds in Luxembourg?

No, there are no harsh formalities for opening investment funds in Luxembourg. Undertakings for Collective Investments (UCIs), hedge funds, Alternative Investment Funds (AIFs), retail funds, Specialized Investment Funds (SIFs), Companies with Fixed Capital (SICAVs), Companies with Variable Capital (SICAFs), the Reserved Alternative Investment Funds (FIARs) are among the type of investment funds that can be easily established in Luxembourg. If you want to invest in Luxembourg, you should hire the services of our specialists in the field.

It is recommended to have support for establishing a company in Luxembourg, particularly to avoid possible registration errors. If you have decided to open a company in Luxembourg and need qualified assistance during the company incorporation process and afterwards, you can contact our agents in Luxembourg.

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Why is Luxembourg an Attractive Country for Investors?