A strategic location, political and social stability, high standard of living, and business-friendly policies that encourage innovation are some of the reasons entrepreneurs choose to start a business in Luxembourg.
Understanding the main steps to start your commercial company in Luxembourg
There are several steps you will need to take to set up a company in Luxembourg, and these steps are simplified into the following:
Draft a business plan for your Luxembourg startup
Drafting a business plan is the first thing to consider when starting a business in Luxembourg. A Business Plan helps you think through all factors of the project. A business plan doesn’t have to be complex, you just have to answer basic questions about the project.
What is your chosen product/service? Who will buy it and why? Who are your competitors and what makes you unique? Answer these and you are good to go.
Choose the company’s legal form
Whatever the size and nature of the business, it is important for entrepreneurs to choose a legal form that suits their activity. The major types of business entities in Luxembourg are as follows:
- Sole Proprietorship: this form of business is mainly set up by a trade, craftsman, or self-employed intellectual worker. As implied, the owners of sole proprietorship have unlimited liability and the business and owner are seen as one under the eyes of the law.
- Public Liability Company (Societe Anonyme or SA.): this is one of the most popular types of business entities in Luxembourg. These entities are usually opened by large businesses but are also available to SMEs.
- Private Limited Liability Company (Société à Responsabilité Limitée or S.A.R.L.): most companies incorporated in Luxembourg are incorporated in the form of private limited liability companies. These types of companies have combined features of both capital companies and partnerships. A private limited company in Luxembourg must have 2 to 100 shareholders.
- The simplified company (SARL-S): in 2017, in a bid to make entrepreneurship available to more people, Luxembourg created a new form called SARL-S. SARL-S is identical to the classic SARL except that it requires lower share capital requirements.
Establish your registered office in Luxembourg
A registered office means a place in Luxembourg where you are permitted to work and that is adapted to the business activities you want to conduct there. Depending on the nature of the business activity, this can be a place rented specifically for the business or a dedicated space in the owner’s private apartment. There are also a few coworking spaces in Luxembourg available for this purpose.
Obtain a business license
All businesses established in Luxembourg must apply for the necessary governmental business permit.
To submit a successful application, the following things are required:
- residency in Luxembourg
- necessary qualifications,
- a clean professional reputation, and
- a fixed and suitable place of operation (a registered office)
The commercial, skilled craft, and industrial activities as well as specific professions are subject to a business permit in Luxembourg.
Register your Luxembourg company
- Draft the Articles of Association: the Articles of Association are the constitutional documents and the company’s important charter which set out its operating rules. The articles of association make the company a legal entity meaning that it can act as such and make obligations to third parties.
- Register with the Trade and Companies Register: the company must be registered with the Trade and Companies Register. First, check the availability of company name. Then register using a Luxtrust Certificate or in person at their office in Luxembourg.
Additional formalities
After registering the company, there are extra formalities that must be carried out with other Luxembourg administrative bodies. The owner of the company must be affiliated with the Social Security Centre as a self-employed person or as an employer (if the owner intends to recruit staff).
The owner must also register for income tax with the Luxembourg Inland Revenue and for VAT with the Registration Duties, Estates, and VAT Authority.
Also, any third-country national planning to stay in Luxembourg for a period exceeding three months(for business activities) must apply for a residence permit before entering the territory.
Luxembourg has an attractive economy and significant support from the government. This makes it an ideal destination to set up a business.
To set up your business in Luxembourg, let’s go ahead and contact your Damalion expert now.
How to Start Your Business in Luxembourg — legal forms (SARL-S, SARL, SA), permits, share capital, governance, bank account readiness, VAT & tax registrations, and a facilitator-led path from name check to operations.
For founders, entrepreneurs, holding companies, SPVs, family offices and international groups • Damalion facilitates scoping, document preparation and provider coordination so your file is review-ready. Approvals remain at the authorities’ and banks’ discretion.
Last updated:What accelerates Luxembourg incorporation?
Pick the right vehicle early (often SARL-S, SARL or SA), confirm whether a business permit (autorisation d’établissement) applies, and prepare a clean shareholder/UBO trail. We facilitate the sequence—name check, articles, notary, RCS filing, permits, bank onboarding, VAT/Direct Tax—so milestones land in the right order.
Common legal forms at a glance
| Form | Who chooses it | Capital & shares | Governance | Notes |
|---|---|---|---|---|
| SARL-S (simplified) | Early-stage founders | Lower entry capital; specific caps/conditions | Managers (gérants) | Streamlined start; convertable to SARL as you scale |
| SARL | SMEs, holdings, trading companies | Fixed capital; registered shares | One or more managers | Popular, flexible, private company feel |
| SA | Larger or capital-intensive businesses | Higher capital; bearer not typical; dematerialized possible | Board of directors or two-tier | Suitable for future listings or wider investor base |
Documents most setups require
- Shareholder/UBO IDs, proof of address, UBO chart.
- Draft articles, activity description and purpose (object).
- Proofs for source of funds and company funding.
- Management details, domicile/registered office agreement.
- Business permit dossier if activity requires it.
- Translations/apostilles if requested by authorities or banks.
Facilitator-led setup — step by step
- Scoping. Choose vehicle, share capital, directors/managers.
- Name & drafting. Company name check; draft articles/resolutions.
- Notary & RCS. Incorporation deed, registration with RCSL.
- Permits. File business permit where applicable.
- Bank onboarding. Open account, first funding, user rights.
- Tax & VAT. Direct Tax registration, VAT/OSS as relevant.
- Operational go-live. Accounting, payroll, contracts and controls.
Bank-ready: what helps acceptance
- Clear activity profile: clients, suppliers, geographies, volumes, currencies.
- Traceable source of funds for paid-in capital and ongoing flows.
- Clean ownership & management files; consistent addresses and IDs.
Costs & timelines
- Setup: notary, registration, domiciliation and professional fees.
- Ongoing: accounting, registered office, payroll (if any), tax/VAT filings.
- Timing: from complete file to registration typically days to weeks, depending on permits and banking.
Related reading
Frequently asked questions
1) Which legal form should I choose?
2) Do I need a business permit (autorisation d’établissement)?
3) How long does incorporation take?
4) Can I set up as a non-resident?
5) What about share capital?
6) Do I need a local director or manager?
7) How do I open a bank account?
8) When do I register for VAT?
9) What corporate taxes apply?
10) Can the company employ staff immediately?
11) Do I need audited accounts?
12) Can I use a domiciliation/registered office?
13) Can foreign companies create a Luxembourg subsidiary?
14) How are dividends and interest handled?
15) Can I convert from SARL-S to SARL later?
