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 Luxembourg an attractive country for investors 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:

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 2016 study issued by fDi Magazine places Luxembourg City on the 9^th position among European cities of the future 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 2018, the total FDI stock registered in Luxembourg was USD 164 billion, as stated by UNCTAD 2019 World Investment Report. 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 rise this sector.

Our local agents invite you to watch a video about the main benefits enjoyed by foreign investors 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.

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

Another 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 start a business in Luxembourg and handle all the formalities and procedures involved.

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.

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.

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 164,806 million in 2018, while the FDI inward flow met a decrease of around USD 5,615 million.
According to the “2019 Doing Business” report presented by the World Bank, Luxembourg ranks 66th 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 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.

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.

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 has 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.

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.

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?