Besides the providers of services such as legal, banking, certain financial services, and insurance, all commercial activities in Luxembourg are governed by the Commercial Law amended 2011. As per the law, all commercial activities need to be registered with the Grand Duchy and require a business permit. The details regarding relevant permits and registrations can be viewed here.
Note that commercial activities carried out by individuals under their own name do not require a business permit as they are not recognized as commercial companies. Examples of such activities are web designers, social media managers, technicians, etc.
The process of incorporating a new business in Luxembourg is simple and straightforward. The “Articles of Association” (AoA) is drawn and registered along with other necessary documents for any type of company.
Depending on the needs and operations of investors, there are several types of companies that can be incorporated in Luxembourg as shown in the table below:
| Type of company | Local name | Min. paid-up capital req. | |
| 1. | Public Limited Company (PLC) | société anonyme (SA) | €30,000 |
| 2. | Private Limited Company/Limited Liability Company (Pvt.Ltd./PLC) | Société à responsabilité limitée (SARL) | €12,000 |
| 3. | Partnership | société en nom collectif (SENC) | No minimum capital required |
| 4. | Civil Company | société civile (SC) | No minimum capital required |
| 5. | Partnership Limited by Shares | société en commandite par actions (SCA) | €30,000 |
Costs involved in the formation of a company
The costs involved in the formation of companies depend on the type of company being incorporated. For various business needs, investors choose the one that suits their operations and management the most. Accordingly, the fees vary too; starting from the registration through to the establishment of the company. Here are some of the important costs that one must be aware of, to plan things ahead.
Public Limited Company (PLC/SA)
Large business enterprises or undertakings that are capital intensive usually opt for a PLC. The greatest advantage of a PLC is that it can attract money from the general public through shares; a bond that is backed by a commercial bank to the extent of paid-up capital. Furthermore, these shares can be openly traded on a stock market.
The cost for the formation of a PLC includes:
- Notary fees
- Publication Trade and Companies register
- Statutory auditor fees
- Minimum share capital (refer to the table above)
- Administrative permits (if applicable)
Private Limited Company (Pvt.Ltd/SARL)
A Pvt.Ltd., alternatively called a Limited Liability Company (LLC) in many countries, is a company where the owners are liable to the extent of their contribution, and nothing beyond. That is in case of loss or bankruptcy, the owners are bound to repay to the extent of their share, the remaining loss may be written off, or compensated by the sale of assets.
The cost included in the formation of an LLC are listed below:
- Minimum capital of €12,000
- Publication Trade and Companies register
- Statutory auditor fees (if required)
- Administrative permits
General & limited by shares Partnerships (SENC/SCA)
A partnership is a company where partners are either collectively or individually liable. For instance, in a general partnership, all partners are liable to compensate for losses, foreclosure, or bankruptcy. Whereas in a Limited Liability Partnership (SCA) at least one partner assumes complete liability while other partners own limited liability only.
Generally, partnerships work best for new businesses and businessmen; where the support and alliance of several people help to navigate to success. The costs involved in incorporating a partnership are listed as follows.
- Notary fees
- Publication Trade and Companies register
- Administrative permits
- Statutory auditor fees
- Share capital €30,000 [only in the case of limited liability (SCA)]
Civil Company (SC)
A civil company is one that is formed to indulge in business that involves immovable properties; real estate, intellectual professions, freelance, etc. There are 4 types of Civil companies:
- Universal earnings society: Referring to a company that is formed to invest all immovable assets in the business and share the profits.
- Universal gains society: Investing what owners/partners gain from the company during the course of business and nothing beyond.
- Particular company: Established to achieve particular objects and purposes with limited scope of work.
- Civil real estate company: Business related immovable properties such as office buildings etc. are pooled for the purpose of administration and management only. The income is generated by renting out the properties and the same is distributed among the partners.
The cost involved in incorporating a civil company are:
- Publication Trade and Companies register
- Notarization (not a legal requirement)
Partnership limited by shares
By far the most interesting form of business is the Partnership Limited by Shares (SCA). An SCA is a mixed format of PLC and LLC, with features adopted from both. The primary difference between an SCA and SCS is that the ownership of shares in the case of an SCS is not transferable as in the case of an SCA.
On most occasions, SCA is feasible where the purpose is to bring several professionals and investors to a unified platform. In this way, the efforts are synergized to achieve greater goals. The cost involved in incorporating an SCA are:
- The share capital of €30,000 (minimum requirement)
- Publication Trade and Companies register
- Administrative permits
- Statutory fees
Local business costs
Needless to say, setting up any type of company will involve costs; state fees, lawyers, registration, etc. The cost may vary from business and time, however, for a general idea below are some costs that you must factor in while budgeting.
Stamp duty for a business permit
The first instance of paying a fee during establishing a business in Luxembourg is the stamp duty fee. It is required for the business permit which is essential for any commercial undertaking in the country. Apart from meeting the general criteria, professional integrity, and qualification, a stamp duty of around €24 may be considered as a prerequisite.
Translation & notarization
At least one notary visit is compulsory to incorporate a company. Drawing up AoA and filing it with the Luxembourg Trade and Companies Register (RCS) is the responsibility of the Notary. The particular notary fees can be found on the Chamber of Notaries’ official website.
Similarly, all documents are required to be in one of the three official languages of Luxembourg; Luxembourgish, German, or French. The cost of translations if required is estimated to be €0.25/word.
RCS registration
In cases where the company is incorporated before a notary, the same is responsible for the registration with RCS. Where the incorporation is handled privately, the owners must handle registration themselves. Depending on the type of company being registered, the cost of registration ranges from €10 to €106.
Furthermore, it is prudent to ensure that the company name being registered is available for allotment. This can be done by requesting a ‘Certificate of availability of trade names/brands’ from the Luxembourg Business Register (LBR). A nominal fee of around €6 is applicable for each request.
Registration duties
Registration duty is a fixed fee that has to be paid to the Luxembourg Registration Duties and amounts to around €75.
Office premises
An office premise, whether physical or virtual, is compulsory to register a business. However, a virtual office is only allowed in case of new businesses or startups. Even then, the office needs to be registered. The rental offices may cost around €300/month on a shared basis in the outskirts of Luxembourg. It is advisable that local realtors be consulted before finalizing an office address.
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