How Consumer Goods Exporters Use Luxembourg Commercial Companies to Optimize Costs

In 2025, consumer goods exporters—especially those in the beauty, personal care, packaged food, and pet product sectors—face rising pressure to optimize cost structures while navigating Europe’s diverse and complex regulatory landscape. Luxembourg, with its business-friendly environment, modern corporate vehicles, and strategic EU location, continues to serve as a highly efficient gateway for international exporters to streamline European operations.

Whether you’re a US skincare brand or a German pet food producer, setting up a Luxembourg commercial company can reduce tax burdens, enhance operational efficiency, and increase market reach.

Why Luxembourg?

Luxembourg is more than just a financial hub. Its location at the heart of Europe, multilingual workforce, EU membership, and flexible corporate structures make it an ideal base for exporters targeting the European market. With a total effective corporate income tax rate of 23.87% in 2025, exporters can tap into tax-efficient operations while benefiting from an advanced legal and regulatory framework.

Key Luxembourg Legal Entities for Exporters

Exporters generally choose between three main Luxembourg commercial vehicles depending on the size of the business and investment appetite:

Table 1: Comparison of Luxembourg Corporate Entities

These vehicles allow exporters to manage inventory, invoice European clients, and handle VAT operations more efficiently through a central structure.

VAT Registration and Trading Schemes

Once a company is formed, exporters must register for VAT. Luxembourg’s standard VAT rate remains one of the lowest in the EU at 17%, which creates an advantage for businesses importing and reselling goods across Europe.

Through intra-community supply schemes, a Luxembourg company can buy goods VAT-free from other Europe Union countries and resell them within the EU under simplified VAT regimes. This reduces upfront tax payments and improves cash flow.

Exporters from non-EU countries such as the United States benefit greatly, as the Luxembourg company becomes the EU-resident importer of record, facilitating customs clearance and reducing VAT complexity for final clients.

Example: A California-based beauty brand exporting skincare products can ship goods to Luxembourg, import them under its SARL company, and redistribute them across the EU with local VAT compliance—all while leveraging Luxembourg’s efficient tax regime.

Streamlined Permits and Regulatory Compliance

Consumer goods such as packaged foods, cosmetics, and pet products fall under specific EU regulations. Luxembourg simplifies the process for obtaining necessary product notifications and registrations:

• Beauty & Personal Care: Products must be registered in the Cosmetic Product Notification Portal (CPNP), which a Luxembourg-based company can handle as the EU-responsible person.

• Packaged Foods & Pet Products: Companies must comply with EU food safety and labeling regulations, including registration with the Luxembourg Food Safety Agency if importing products.

Operating from Luxembourg ensures centralized compliance, which is especially helpful for exporters dealing with multiple national authorities across Europe.

Optimizing Costs with a Centralized EU Trading Hub

Beauty & Personal Care Exporters

Luxembourg companies allow beauty brands to centralize European distribution, manage local marketing expenses, and claim VAT input on packaging and promotional activities. Moreover, brands can reduce their tax exposure by deducting intellectual property (IP) costs and royalty payments.

Example: A German skincare company switches from selling directly from Germany to managing its EU business through a Luxembourg SARL. It now benefits from:

• Lower VAT on marketing and warehousing costs

• Deductibility of royalties paid to the German HQ

• Streamlined invoicing across EU distributors

Packaged Food Exporters

Luxembourg offers logistical advantages and smooth import procedures for packaged food exporters. Customs clearance through Luxembourg’s efficient port and rail connections reduces delays and storage costs.

For instance, a Texas-based gluten-free snack company operating through a Luxembourg SARL-S avoids customs delays at larger EU ports and manages sales to retailers in France, Belgium, and the Netherlands with simplified VAT filings.

Pet Products Exporters

Pet products—especially premium pet food and accessories—are growing in popularity. Exporters can register Luxembourg entities to warehouse, label, and distribute goods efficiently. Importers benefit from a harmonized pet product regulatory framework.

A Berlin-based premium pet food brand recently transitioned to a Luxembourg SA structure to access private equity capital and expand across southern Europe, optimizing logistics and taxation.

Tax Efficiency and IP Structuring

A key advantage of using Luxembourg lies in IP tax planning. Consumer goods exporters with brand trademarks, packaging innovations, and formulas can structure IP ownership through a Luxembourg entity.

This allows them to:

• License IP to EU distributors and claim deductions

• Centralize royalty income

• Potentially benefit from the Luxembourg IP regime (subject to eligibility)

The result is a more tax-efficient group structure, especially valuable for high-margin beauty or wellness products.

Cross-Border Opportunities for US and German Exporters

Luxembourg has emerged as a preferred entry point for US exporters looking to establish a legal foothold in Europe. The country’s English-speaking professionals, EU-compatible laws, and absence of foreign ownership restrictions make it easy to onboard operations.

Meanwhile, German exporters are increasingly relocating trading and holding functions to Luxembourg. High corporate taxes in Germany (around 30%) make Luxembourg’s 23.87% corporate income tax rate attractive for mid-sized businesses seeking to protect margins while staying close to their home market.

Case Example: A family-owned German natural deodorant company, facing rising labor and operational costs, transitioned its European invoicing and warehousing to a Luxembourg SARL. It now benefits from:

• Lower effective tax rates

• Full EU regulatory alignment

• More favorable banking and financing options

Business Banking and Financial Support

Luxembourg’s banking sector is highly international and business-oriented. Exporters can access:

• Multi-currency business accounts

• Trade finance and invoice factoring

• Accounts tailored for eCommerce and subscription models

With high compliance standards, Luxembourg banks conduct thorough KYC and AML checks, but once approved, companies enjoy stable, reliable banking relationships—essential for cross-border trading.

Corporate Substance and Local Requirements

To benefit from tax treaties and maintain credibility, Luxembourg companies must maintain adequate substance:

• Local director(s)

• Registered office

• Bookkeeping and annual accounts

• Active decision-making in Luxembourg

Fortunately, substance requirements are reasonable, and exporters can outsource many functions to local service providers.

Damalion Supports Consumer Goods Exporters

At Damalion, we help consumer goods exporters establish efficient trading structures in Luxembourg. Whether you’re launching a new beauty brand into Europe or optimizing the tax footprint of a German food business, our Damalion experts guide you through every step—from company formation and VAT registration to compliance and banking introductions.

✅ We specialize in:

• SARL-S, SARL, and SA formations with business permit

• EU import and trading compliance

• VAT registration and accounting

• Director and office arrangements

• IP structuring and royalty optimization

• Cross-border support for US and German exporters.

Luxembourg is more than a financial center—it’s a launchpad for consumer goods exporters targeting the European market. With its flexible company laws, tax advantages, low VAT rate, and reliable infrastructure, exporters can cut costs, expand efficiently, and stay competitive.

Ready to scale your exports with a Luxembourg company? Contact Damalion today and let us guide your expansion into Europe.