Luxembourg, a small yet economically vibrant country, is known for its favorable business environment, strategic location in Europe, and a robust legal and financial framework. Entrepreneurs from around the world are increasingly drawn to the Grand Duchy of Luxembourg for establishing their businesses. Even non-residents can easily set up a commercial company in Luxembourg, thanks to its business-friendly policies and efficient administrative procedures.
This guide will walk you through the essentials of establishing a commercial entity in Luxembourg, focusing on the necessary permits, common types of legal entities, corporate tax considerations, and the services provided by Damalion.
The Luxembourg Business Environment
Luxembourg offers a stable political environment, a well-established legal system, and a thriving financial sector, making it a prime destination for business ventures. It boasts a highly skilled multilingual workforce and is strategically positioned with excellent connectivity to major European cities. Additionally, Luxembourg‘s pro-business policies and modern infrastructure further enhance its appeal to international entrepreneurs.
The Business Permit: Autorisation d’établissement
To start a commercial activity in Luxembourg, obtaining a business permit, known as “autorisation d’établissement,” is mandatory. This permit ensures that the company meets all necessary legal requirements and is authorized to conduct business operations in the country. The autorisation d’établissement is issued by the Ministry of the Economy and applies to various commercial activities, including retail, services, and manufacturing. Non-resident entrepreneurs must appoint a local director to represent the company and fulfill legal requirements. At Damalion, we provide the option of a local director, as permitted by Luxembourg law, ensuring compliance and smooth operational start-up.
Legal Entity Types in Luxembourg
Several legal entity structures are available for entrepreneurs to choose from in Luxembourg. The most common types are:
- Société à Responsabilité Limitée (SARL): The Luxembourg SARL is a private limited liability company, a popular choice due to its flexible structure and limited liability protection. The minimum share capital requirement for a SARL is EUR 12,000. The capital must be fully subscribed and paid up at the time of incorporation.
- Société à Responsabilité Limitée Simplifiée (SARL-S): The Luxembourg SARL-S is a simplified version of the SARL, designed for small entrepreneurs and startups. It has a lower minimum share capital requirement of just EUR 1, making it more accessible for smaller businesses or those in the early stages of development.
- Société Anonyme (SA): The Luxembourg SA is a public limited company that suits larger enterprises looking to raise capital publicly. The minimum share capital requirement for an SA is EUR 30,000, which must be fully subscribed, and at least 25% must be paid up upon incorporation.
Corporate Income Tax
Luxembourg has a competitive tax regime, but corporate entities are subject to a corporate income tax rate of 24.94%. This rate includes the national corporate tax and municipal business tax, which may vary slightly depending on the municipality. Luxembourg also benefits from numerous double taxation treaties, reducing the tax burden for companies engaged in international trade.
Damalion’s Support for Non-Resident Entrepreneurs
At Damalion, we specialize in assisting non-resident entrepreneurs in setting up their businesses in Luxembourg. We offer a comprehensive suite of services, including the provision of a local director to comply with legal requirements. Additionally, we help streamline the process of opening a business bank account for your Luxembourg company, which is essential for managing finances and daily operations.
Luxembourg’s welcoming business environment, combined with Damalion’s expert guidance, makes establishing a commercial company as a non-resident a seamless and efficient process. Whether you are looking to tap into the European market or leverage Luxembourg’s strategic position, we are here to support your entrepreneurial journey from start to finish.
Damalion supports international entrepreneurs to setup their company in Luxembourg with business bank account. Please contact your Damalion expert now.
Create your commercial company in Luxembourg as a non-resident — permits, legal forms (SARL, SARL-S, SA), local director rules, bank account, tax points for 2025, and a clear path from idea to registration.
For non-resident entrepreneurs, company founders, family offices and international groups • Damalion helps you prepare a complete, compliant file and coordinates with selected Luxembourg partners. Authorizations, registrations and bank account approvals remain the decision of the competent authorities and institutions.
Last updated:What makes a Luxembourg company project feasible in 2025?
Luxembourg welcomes foreign founders when the project is clear, documented and aligned with the rules on establishment, corporate law and taxation. Authorities look at who manages the company, where activities are carried out, how the business is financed, and whether the structure respects substance and transparency rules.
Most commercial activities need an establishment authorization from the Ministry of the Economy. Company forms such as SARL, SARL-S and SA require a notarial deed and registration with the Luxembourg Business Registers. From tax year 2025, the combined corporate tax rate in Luxembourg City is about 23.87%, and the rate in other municipalities is close, depending on the local business tax.
Documents most projects require
- For shareholders and ultimate beneficial owners (UBOs)
- Valid passport or ID and recent proof of address.
- Tax residency, tax identification number and, where applicable, information on US indicia.
- Short description of professional background and current activities.
- For the future company
- Draft company name and description of the planned activity.
- Choice of legal form (SARL, SARL-S, SA) and proposed share capital.
- Registered office address in Luxembourg (lease, domiciliation or owned premises).
- Draft articles of association or term sheet for the notary.
- Shareholding and UBO chart; identification of managers and signatories.
- For the establishment authorization (business permit)
- Evidence of professional integrity of the manager in charge (extracts from criminal records and sworn statements, where required).
- Evidence of professional qualifications or relevant experience when the activity requires it.
- Proof of a genuine physical establishment in Luxembourg adapted to the activity.
- Basic business plan with activity description, target clients, main suppliers and financial projections.
- Proof of payment of the administrative fee for the permit.
- For tax, social security and VAT registrations
- Articles of association, notarial deed and RCS number.
- Information on expected turnover and activities to assess VAT registration and thresholds (for example the EUR 35,000 threshold for certain small businesses).
- Estimated staff numbers and employment structure for social security registration.
- For bank account opening
- Full KYC package for shareholders, UBOs and managers.
- Company documents, establishment authorization and tax registrations, where available.
- Clear description of expected incoming and outgoing payments, currencies and counterparties.
Main company forms for commercial activities
| Legal form | Minimum capital | Shareholders | Typical use |
|---|---|---|---|
| Société à Responsabilité Limitée (SARL) | At least EUR 12,000, fully subscribed and paid in at incorporation. | 1 to 100 shareholders, natural or legal persons. | Standard form for small and medium commercial companies, holding structures with substance, and service providers. |
| Société à Responsabilité Limitée Simplifiée (SARL-S) | From EUR 1 to EUR 12,000, fully paid in at incorporation. | Only natural persons as shareholders, up to 100 in total. | Entry-level structure for new entrepreneurs with limited initial capital and simple governance. |
| Société Anonyme (SA) | At least EUR 30,000; at least 25% usually paid in at incorporation, with the rest called later. | 1 or more shareholders, natural or legal persons. | Suitable for larger projects with several investors, future access to capital markets or complex financing. |
Key steps to create your commercial company
- Define the project and choose the legal form. Clarify the activity, target clients, expected turnover and financing. Decide whether SARL, SARL-S or SA fits best, taking into account capital, governance and investor expectations.
- Identify the manager in charge and local director needs. Appoint the person who will manage daily operations and hold the establishment authorization. For non-residents, ensure practical access to Luxembourg and consider a local director in line with Luxembourg rules.
- Secure premises and registered office. Choose an address in Luxembourg that matches the activity (domiciliation, office, shop, warehouse or other premises) and collect the supporting documents.
- Prepare and file the establishment authorization. Assemble the integrity, qualification and premises evidence and submit the permit request, usually via the MyGuichet.lu portal or by post, following the official forms.
- Incorporate the company before a notary. Once the project and permit file are ready, sign the notarial deed, deposit the share capital in a blocked account if required, and register the company with the Luxembourg Business Registers (RCS).
- Register for tax, VAT and social security. Obtain the company’s tax number, assess VAT registration needs and register as employer with the Joint Social Security Centre (CCSS) if staff will be hired.
- Open the operational bank account. Present the corporate documents, establishment authorization and ownership structure to the selected bank together with a clear description of payment flows.
- Set up governance, accounting and compliance. Put in place internal signatory rules, accounting support, invoicing templates, data retention rules and periodic reporting so that the company respects Luxembourg law from the first day of activity.
Capital, costs and expected timing
- Share capital
- SARL: minimum EUR 12,000, fully paid in at incorporation.
- SARL-S: between EUR 1 and EUR 12,000, fully paid in; the company must convert to a standard SARL if capital is increased above this ceiling.
- SA: minimum EUR 30,000, with at least 25% usually paid in at incorporation.
- Administrative and professional costs
- Notary fees for the incorporation deed and RCS filings.
- Business permit fee (for example a EUR 50 chancery duty) and possible translation or legalization costs.
- Professional fees for legal, tax, accounting and payroll support, depending on the complexity of the structure.
- Taxes from 2025
- Combined corporate tax rate in Luxembourg City around 23.87% (central corporate tax, solidarity surcharge and municipal business tax together; other municipalities are close, with small variations).
- Luxembourg applies many double tax treaties and participation exemption rules for qualifying shareholdings and dividends, subject to conditions.
- Standard timelines
- Business permit: usually up to a few months from a complete file; tacit approval rules may apply after a defined period.
- Incorporation and RCS registration: generally a few working days after the notarial deed, once formalities are complete.
- Bank account opening: from several days to several weeks, depending on the bank’s risk assessment and the clarity of the KYC file.
Related reading
Frequently asked questions
Can a non-resident set up a commercial company in Luxembourg?
Yes. Non-resident founders may create a Luxembourg company if they meet company law, establishment, tax and anti-money-laundering requirements. The authorities review the project, the ownership structure, the manager in charge and the place where the activity is effectively managed.
Is an establishment authorization always required?
Most commercial, craft and industrial activities carried out on a regular basis in Luxembourg require an establishment authorization issued by the Ministry of the Economy before operations start. Some liberal professions follow their own sector rules. Applicants must check the scope of the law before engaging in any commercial activity.
Who must hold the establishment authorization?
The authorization is issued to the person or legal entity that effectively manages the activity. In a company, a designated manager in charge must meet conditions of professional integrity, qualifications (where required) and effective, ongoing involvement in the business. The manager in charge is identified in the file and must remain in office for the authorization to stay valid.
Does the manager in charge have to be resident in Luxembourg?
Luxembourg law does not impose automatic residence, but the manager in charge must be able to ensure effective and continuous management from Luxembourg. In practice, this means a real presence and sufficient availability on site. Where the manager lives abroad, the distance and travel conditions must still allow regular supervision of the activity.
What are the minimum capital requirements for SARL, SARL-S and SA?
A SARL requires at least EUR 12,000 in fully paid-in share capital. A SARL-S requires between EUR 1 and EUR 12,000, also fully paid in. An SA requires at least EUR 30,000 in share capital, with at least 25% typically paid in at incorporation and the remainder called later in line with company law and the articles of association.
Can legal entities be shareholders of a Luxembourg company?
Yes. Legal entities may hold shares in Luxembourg companies, including SARLs and SAs. For SARL-S, only natural persons can be shareholders. In all cases, ultimate beneficial owners must be identified and registered with the Luxembourg Register of Beneficial Owners, usually within one month of incorporation or any change.
What is the combined corporate tax rate in Luxembourg from tax year 2025?
From tax year 2025, the central corporate income tax rate is reduced to 16%. Together with the solidarity surcharge and the municipal business tax in Luxembourg City, the combined rate is about 23.87%. The effective rate may differ slightly in other municipalities due to different municipal business tax rates.
Is VAT registration mandatory for every new company?
No. VAT registration depends on the nature of the activity and expected annual turnover. Many businesses must register from the start, but some small activities remain under a threshold regime where registration becomes mandatory when turnover exceeds a defined limit, such as EUR 35,000 for certain services. Each case must be checked against the current VAT rules.
What is the role of the Luxembourg Business Registers (RCS/RESA)?
The Luxembourg Business Registers record the existence of companies, partnerships and other entities. Incorporation deeds, articles of association, changes in directors, registered office and share capital must be filed and published. From late 2024, new technical formats and identification data, such as national identification numbers for certain officers, are required for many filings.
What must be reported to the Register of Beneficial Owners (RBE)?
Companies must declare any natural person who ultimately owns or controls the entity, typically those holding more than 25% of shares or voting rights, or controlling in another way. Information such as name, nationality, date and place of birth, address, nature and extent of interest and an identification number must be filed, subject to limited confidentiality exemptions.
Are there specific rules for non-EU founders?
Non-EU nationals may create a Luxembourg company but must also comply with immigration rules when they plan to manage the business personally from Luxembourg. In many cases, a residence permit for self-employed activity or for management functions is required. Company law and establishment rules apply in the same way to EU and non-EU founders.
Can a Luxembourg company operate without premises in Luxembourg?
For most commercial, craft and industrial activities, authorities expect a genuine and permanent establishment in Luxembourg, adapted to the activity. A simple postal address is not sufficient when the law requires specific premises. The permit and company file must demonstrate that the business can effectively operate from Luxembourg.
What are the consequences of changes in directors or managers?
Changes in directors, managers and the manager in charge must be filed with the Luxembourg Business Registers and, where relevant, notified to the authority that issued the establishment authorization. The RBE must also be updated if beneficial ownership changes. Failure to report changes on time may lead to administrative fines or questions on the validity of the authorization.
How long does it usually take to obtain the establishment authorization?
When the file is complete, the administration usually processes the application within a few months. In some situations, a lack of response after the statutory period may be treated as approval, but applicants should always check the latest legal provisions and keep evidence of filing and correspondence.
Can one authorization cover several activities?
Yes, if the activities are compatible and clearly described. The application must list each planned activity, and the manager in charge must meet the integrity, qualification and premises conditions for all of them. A significant extension of activities may require a modification or a new authorization.
What happens if the company does not start its activity after incorporation?
If the company remains inactive for a long period, it may still have filing, tax and accounting obligations. In addition, an establishment authorization may lose validity if it is not used within a defined period or if the activity stops for too long. Directors must monitor these time limits and either activate the business, modify the authorization or arrange for proper liquidation.
Are director fees subject to VAT in Luxembourg?
Luxembourg has updated its approach to VAT on directors’ services. Companies should verify, with their tax adviser, whether directors are treated as taxable persons for VAT purposes and whether self-assessment applies. Past periods may be subject to regularisation rules. The treatment depends on the detailed factual situation and the latest administrative guidance.
What are the main accounting obligations for a small SARL?
A SARL must keep proper books and records, prepare annual accounts and file them with the RCS within legal deadlines. Small companies may benefit from simplified layouts and reduced publication requirements, but they must still give a true and fair view of their financial position. Failure to file accounts can lead to fines and, in serious cases, dissolution proceedings.
Can losses be carried forward for tax purposes?
Luxembourg allows the carry-forward of tax losses under conditions set out in the income tax law. Rules may include time limits and restrictions in case of changes in ownership or activity. Companies should analyse their position each year and keep detailed documentation to support any tax loss carry-forward claimed.
Is this information legal or tax advice?
No. This page provides general information only and reflects the law and practice known at the time of the latest update. It does not replace a detailed review by a Luxembourg-qualified legal or tax adviser. Before making binding decisions or investments, entrepreneurs should obtain tailored advice that takes their full situation into account.
10 Luxembourg banks for private and corporate clients
Illustrative list of established banks in Luxembourg that work with individuals, entrepreneurs and international businesses.
- Banque et Caisse d’Épargne de l’État (Spuerkeess) – state-owned bank with the largest local branch network.
- BGL BNP Paribas – universal bank for retail, corporate and wealth management clients.
- Banque Internationale à Luxembourg (BIL) – full-service bank for individuals, corporates and institutional clients.
- Banque de Luxembourg – private bank focused on wealth management and entrepreneurs.
- Banque Raiffeisen – cooperative bank serving households, professionals and SMEs.
- ING Luxembourg – international bank for retail, corporate and private banking clients.
- Société Générale Luxembourg – banking solutions for corporates, institutions and private clients.
- Deutsche Bank Luxembourg – cross-border banking and financing for international clients.
- Intesa Sanpaolo Bank Luxembourg – corporate and investment banking hub of the Italian group.
- HSBC Luxembourg – international banking and treasury services for multinational and institutional clients.
10 things to do in Luxembourg City during a 24-hour business trip
Compact ideas you can combine around meetings and travel time.
- Walk the Chemin de la Corniche for panoramic views of the old fortifications and the Grund valley.
- Visit the Bock Casemates (UNESCO-listed underground tunnels) for a short but impressive historic stop.
- Explore the Old Town (Ville Haute) around Place Guillaume II, Place d’Armes and the Grand Ducal Palace.
- Take the Pfaffenthal lift down to the lower town and enjoy a quick walk through the Grund.
- Cross the Adolphe Bridge and look over the Pétrusse valley on your way between meetings.
- Walk through the Kirchberg business district and, if time allows, visit MUDAM or the Philharmonie area.
- Spend an hour at the Luxembourg City Museum or the National Museum of History and Art in the upper city.
- Schedule an early-morning or evening walk in the Municipal Park to decompress and get daylight.
- Enjoy a relaxed dinner in the historic centre or in Grund, then take an evening stroll past the illuminated fortifications.
- Use the city’s free public transport (trams and buses) to connect quickly between Kirchberg, the station area and the old town.
10 business-friendly hotels in Luxembourg City
Hotels with good access to business districts and the historic centre.
- Sofitel Luxembourg Le Grand Ducal – views over the old town, central for meetings and dinners.
- Sofitel Luxembourg Europe – 5-star hotel in Kirchberg near EU institutions and offices.
- Meliá Luxembourg – modern business hotel close to Kirchberg and museums.
- Le Royal Hotels & Resorts – Luxembourg – classic city-centre hotel with strong corporate focus.
- Hotel Le Place d’Armes – boutique hotel on Place d’Armes for central executive stays.
- Mama Shelter Luxembourg – design-led hotel in Kirchberg with lively common areas.
- Park Inn by Radisson Luxembourg City – close to the main station and walking distance to the old town.
- Novotel Luxembourg Centre – central hotel between the station area and the historic core.
- Novotel Luxembourg Kirchberg – convenient for meetings on the Kirchberg plateau.
- Parc Hotel Alvisse – large hotel with leisure facilities a short drive from the centre and airport.
