Registration of Company in Luxembourg - S.A.R.L.

Company registration in Luxembourg

The location of the Grand Duchy of Luxembourg is Western Europe. This small country shares borders with Belgium, Germany, and France. Luxembourg is landlocked country. Being one of the smallest independent European countries, Luxembourg occupies just a bit more than 2500 km2. The population is about 550 thousand people.

Luxembourg is the member of the EU, NATO, the UN, OECD, and constitutes intergovernmental union Benelux with the Netherlands and Belgium.

National composition of the state is diverse, thus there are predominantly indigenous inhabitants, as well as French people, Germans, Italians, Portuguese people, etc. Three languages has the status of state language, namely: German, Luxembourgish, French. English is also widespread, especially in the business sphere and tourism. Most of the population are Catholics.

According to its political system Luxembourg is a constitutional monarchy.

The official currency is Luxembourgish franc.

The climate of Luxembourg is mild and moderate.

Luxembourg is a large financial center. The most serious amounts of assets are concentrated in the banks of the state. The financial sector is naturally one of the most important in the economy of Luxembourg. In addition, insurance activities, sphere of communications, IT, trade, etc. are successfully developing in the country.

Forms of doing business

Most of entrepreneurs tend to register company in Luxembourg in the following forms:

• Public company with limited liability or Joint-Stock Company (SA);
• Limited Liability Company (SARL).

Legislative framework.

Registration and management of the company takes place in Luxembourg in accordance with the Law "On Commercial Companies" of 1915 (the adopted consolidated version is currently in force).

How to register SA in Luxembourg? Peculiarities

• Notarial deed on foundation of the company shall be registered in the Trade Register. The document should also be published in the «Memorial» bulletin.
• Minimum share capital shall be Ђ 31 000. At the moment of registration of the company in Luxembourg a quarter of the total amount should be paid.
• Registered shares or bearer shares can be issued.
• The company shall have at least two participants. They can be either foreign nationals or residents of Luxembourg. Shareholders may appoint attorneys by issuing orders, powers of attorney, and trust contract.
• It is necessary to hold meeting of shareholders once a year.
• Company in Luxembourg should have the Administrative Board, which shall be composed of at least 3 persons and 1 delegate.
• Necessity of submission of the audit in the Trade Register is determined by the size of the company. The auditor's report is required.

SARL company formation in Luxembourg. General provisions

• It is required to provide a notarized deed of foundation, such as for SA.
• Minimum issued subscription capital of shareholders shall be from Ђ 12 500. The total amount is contributed to the issue.
• Only registered shares are permitted.
• The company can have from one to several partners. They can be both citizens of Luxembourg and representatives of other countries.
• If there are more than 25 partners, the meeting should be held once a year.
• One or several managers shall be in composition of the Administrative Board.
• Necessity to provide financial statement determines the size of the company.
• The auditor's report is not required to be submitted.

Taxes in Luxembourg

• Resident companies paying taxes are the following:
  - companies with registration in Luxembourg and legal address in Luxembourg;
  - companies supervised and managed from Luxembourg.
• Resident companies pay taxes from all the worldwide income. The exceptions are:
  - dividends,
  - capital gains,
  - income from royalties.
• Non-resident companies pay taxes only on income that was received in Luxembourg, and as an exception, the same items of income, as in the case of resident company, are taken into account.
• Income tax rate equals to 29.22% (corporate tax is 21%, fee for the Employment Fund - 1.47%, municipal business tax - 6.75%). The adjustment of the basic rate is possible. However, the experience has shown that its fluctuations are insignificant.
• Minimum (advance) tax is introduced for all companies-residents of Luxembourg. Annual balance of the company (income for a certain financial year is taken into account ) will influence the amount of tax. For example, a company with a balance of up to € 350000 will pay this tax in the amount of € 535.
• Withholding tax on dividends, which the company in Luxembourg pays out to shareholders, equals to 15%. Exemption from payment of this tax is provided, if the recipient company:
  - is another resident company;
  - is resident of the EU Member State and complies with the EU Directive on parent companies and subsidiaries (Article 2).
• VAT is 15% (this is the lowest European rate). For certain types of goods and categories of services lower rates are provided.
• Property tax is 0,5%.
• Income tax for natural persons is calculated on a progressive scale. Maximum equals to 43,6%.
• Natural persons do not pay property tax.

Bookkeeping in Luxembourg

SA company shall necessarily submit annual financial statements approved at the annual shareholders' meeting. It is also necessary to undergo annual audit, which is carried out by staff certified auditor. Reports shall be submitted to the Register of Trade and Companies not later than 7 months after the expiration of the period of fiscal year.

SARL company also prepares annual financial statements. There is no need to appoint auditor of the company, which

- workforce is up to 25 employees;

- overall balance does not exceed € 3125000;

- net turnover is not more than € 6,25 million.

If any 2 indicator are exceeded, the financial statements shall be submitted.

Delay in filing statements causes fines and penalties.

Do you want to register or buy a company in Luxembourg? Then we are ready to provide all the necessary services. Registration of companies, trusts, businesses in a variety of countries around the world is one of the main directions of our work.

The company in Luxembourg will be start for reliable, legitimate and successful business.