Embarking on Entrepreneurship in Luxembourg: starting your business

Starting your own business in Luxembourg is an exciting venture, offering countless opportunities in the heart of Europe. This guide will walk you through the essential steps and crucial information required to kickstart your entrepreneurial journey in this dynamic and prosperous country.

Choosing the Right Legal Structure

Selecting the appropriate legal structure for your company is the pivotal first step in your entrepreneurial voyage. Luxembourg offers a variety of options, including SARL, SA, Sàrl-S and more. Each structure has its unique characteristics, advantages, and disadvantages, making it essential to assess your business model and long-term goals carefully. You may also check Damalion’s guide to setup your business Luxembourg.

Legal Requirements and Registration

To establish your business legally, you must comply with Luxembourg‘s legal requirements. This involves drafting articles of association, defining the company’s objectives, and appointing directors. Once these elements are in place, you’ll need to register your company with the Luxembourg Trade and Companies Register (RCS), obtain a business permit if necessary, and fulfill any specific industry-related obligations.

Capital Requirements

Understanding the capital requirements for your chosen legal structure is paramount. The amount of initial capital needed varies depending on the type of company you wish to create. It’s essential to be aware of these financial prerequisites to ensure a smooth registration process.

Tax Considerations

Luxembourg‘s tax landscape is a crucial aspect to consider when establishing your company. The country’s attractive tax regime includes a competitive corporate income tax rate, access to double taxation treaties, and VAT regulations.

Labor Laws and Hiring Employees

As your business grows, you may need to hire employees. Understanding Luxembourg’s labor laws and employment regulations is crucial to ensure compliance and create a harmonious work environment. It’s imperative to acquaint yourself with topics such as employment contracts, wages, working hours, and social security contributions.

Intellectual Property and Trademarks

Protecting your intellectual property and trademarks is vital to safeguard your business’s identity and innovations. Luxembourg provides mechanisms for registering patents, trademarks, and copyrights, ensuring that your intellectual assets remain secure.

Accounting and Reporting

Maintaining accurate financial records and adhering to accounting standards is a legal obligation for businesses in Luxembourg. Familiarize yourself with the accounting and reporting requirements, which include annual financial statements and regular tax filings. Engaging the services of a professional accountant can help streamline this process.

Starting a business in Luxembourg is a rewarding endeavor, offering a thriving ecosystem for entrepreneurs. To ensure your venture’s success, make informed decisions when choosing a legal structure, meeting legal requirements, managing capital, understanding tax implications, and accessing funding sources. Familiarity with labor laws, intellectual property protection, and accounting practices is also crucial. With careful planning and strategic execution, your entrepreneurial journey in Luxembourg can flourish, contributing to the country’s vibrant and diverse business landscape.

Damalion has been helping international entrepreneurs to setup their business in Luxembourg. Please contact your Damalion expert to structure your next company in Luxembourg. 

Embarking on Entrepreneurship in Luxembourg: starting your business — legal forms, permits, capital, tax and VAT, accounting duties, and how to get from idea to registration and launch.

For entrepreneurs, family offices, holding companies, SPVs and international groups • This guide explains requirements in plain language so you can prepare a complete, consistent file. Acceptance of any permit, registration, or bank account remains at the authority or bank’s discretion.

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What helps a smooth incorporation in Luxembourg?

Pick the right legal form, meet capital rules, gather clean identification and ownership proofs, and explain your planned activity in simple terms: what you do, where, with whom, and expected turnover. Keep one clear trail of documents from start to finish.

Main company forms at a glance

Form	Who it suits	Minimum capital	Incorporation	Notes
SARL (private limited)	SMEs, subsidiaries	EUR 12,000 (fully paid at incorporation)	Notarial deed; register at RCS	Managers; shares not freely transferable.
SA (public limited)	Larger businesses, financing rounds	EUR 30,000 (fully subscribed; ≥25% paid at formation)	Notarial deed; register at RCS	Board or two-tier system possible.
SARL-S (simplified SARL)	New founders with limited budget	EUR 1 to EUR 12,000 (fully paid)	Private deed possible; register at RCS	Restricted to specific activities; can convert later.

Core documents you will need

• Valid ID and proof of address for founders, managers, and any direct/indirect owners.
• Articles of association and registered office details.
• Ownership chart and beneficial owner information (RBE).
• Proof of share capital deposit from a bank (as applicable to the form).
• Business description (activities, customers, suppliers, locations).
• Where required: establishment authorization (business permit) before starting the activity.
• VAT registration if thresholds or activity rules require it.

Business permit and registrations

• Establishment authorization: most ongoing commercial, craft, and industrial activities require it. Apply before operations.
• RCS (Trade and Companies Register): file incorporation and keep filings up to date.
• RBE (Register of Beneficial Owners): file beneficial ownership and update on changes.
• VAT: register if you exceed the national threshold or your activity requires VAT from day one.
• Accounting and annual accounts: approve within the legal timeframe and file on time at the RCS.

Tax and VAT: simple overview

• Corporate income tax: Luxembourg applies corporate tax plus municipal business tax and a solidarity surcharge; rates depend on location and size.
• VAT: from 1 January 2025, the domestic VAT registration threshold is EUR 50,000 (standard rules). Distance-sales EU cap remains EUR 10,000. A new SME scheme applies under EU rules.
• Withholding taxes: check treaty relief and EU directives where applicable.

Opening your bank account 

For capital deposit and operations, banks will run KYC/AML checks. Be ready to explain your activity, expected turnover, countries, and counterparties. Provide traceable funds and ownership proofs.

Costs and timing

• Company setup costs include notary, RCS and publication fees, and any permit fees.
• Bank and accounting costs depend on activity and volume.
• From a complete file to registration: typically a few days to a few weeks, depending on your form and permits.

Related reading

• Create your commercial company in Luxembourg as a non-resident
• Successfully applying for establishment authorization in Luxembourg
• Comprehensive guide to establishing your SARL-S in Luxembourg
• Luxembourg company formation: quick facts
• Pitch your startup: Series A/B/C and growth equity

Frequently asked questions

Do I need an establishment authorization before I start?

Yes. Most ongoing commercial, craft, and industrial activities require prior authorization. Apply and receive the authorization before you begin operations.

Who grants the establishment authorization?

The competent administration processes the application under national rules. You submit identification, professional qualification (where required), good repute, and business details.

What is the minimum capital for a SARL?

EUR 12,000, fully paid at incorporation. The company is formed by notarial deed and then registered at the RCS.

What is the minimum capital for an SA?

EUR 30,000, fully subscribed with at least 25% paid at formation. Incorporation is by notarial deed and registration at the RCS.

What is the minimum capital for a SARL-S?

From EUR 1 up to EUR 12,000, fully paid. A private deed is possible; register at the RCS. Some activities are restricted.

When must I file beneficial ownership information?

File at incorporation and update within the legal timeframe when changes occur. Keep information accurate and current.

Who qualifies as the beneficial owner?

Any natural person who ultimately owns or controls the entity (directly or indirectly) or, if none can be identified, the most senior executive acting as beneficial owner for filing purposes.

What are the penalties for failing to file or update beneficial ownership?

Breaches can lead to administrative fines under Luxembourg law. Keep filings timely and accurate to avoid sanctions.

What is the VAT registration threshold in 2025?

From 1 January 2025, the domestic threshold is EUR 50,000 for resident businesses (standard rules). For EU distance sales, the EUR 10,000 cap still applies.

Does an SME scheme apply from 2025?

Yes. An EU SME scheme applies with specific conditions and reporting. Check eligibility and reporting duties before opting in.

When do I approve and file annual accounts?

Approve annual accounts within the legal period and file them with the RCS within the filing deadline. Late filing can trigger extra fees and penalties.

Are audits mandatory?

Audit obligations depend on size criteria and legal form. If thresholds are exceeded or specific rules apply, appoint a statutory auditor.

Do managers or directors need to be residents?

Resident requirements depend on your activity and permit conditions. Ensure effective management and compliance can be demonstrated in Luxembourg.

Can I register for VAT voluntarily below the threshold?

Yes, voluntary registration is possible in defined cases. Consider cash-flow, input VAT recovery, and compliance obligations before applying.

What must the articles of association include?

Company name, form, seat, purpose, capital, shares, governance, financial year, and rules on meetings and accounts. Keep the purpose accurate and consistent with permits.

Do I need a registered office in Luxembourg?

Yes. Provide a valid registered office address. Domiciliation services are common if you do not lease premises immediately.

Can a foreign company set up a branch?

Yes. A branch has no separate legal personality; file required documents at the RCS and respect local tax and regulatory duties.

How are dividends and capital gains taxed?

Rules depend on the entity type, participation size, holding period, treaties, and EU directives. Obtain tailored tax advice before distributions or exits.

What banking documents should I prepare?

Identification, proof of address, company documents, ownership chart, and a clear business profile (activities, turnover, countries, counterparties). Provide traceable funding sources.

Can the authorities or a bank refuse my application?

Yes. Each decision follows the law or the institution’s risk policy. Another solution or institution may be more suitable for the same file.

Note: This guide is informational and does not replace professional advice. Verify requirements for your specific activity before you start.

10 Leading Banks in Luxembourg

Quick list of established institutions with retail, corporate, and private banking services. Jump to map

1. Spuerkeess (BCEE) – state-owned universal bank.
2. BGL BNP Paribas – large retail and corporate network.
3. Banque Internationale à Luxembourg (BIL) – corporate and wealth services.
4. Banque de Luxembourg – private banking and SME services.
5. ING Luxembourg – retail and business banking.
6. Banque Raiffeisen – cooperative bank with local branches.
7. UBS (Luxembourg) S.A. – wealth management and investment services.
8. Société Générale Luxembourg – corporate and investment banking.
9. Pictet & Cie (Europe) S.A. – private banking and asset services
10. UBS Luxembourg – corporate and wealth services.

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10 Best Things to Do in Luxembourg City in 24 Hours

Walkable highlights clustered around the Old Town, Grund, and Kirchberg. Jump to map

1. Grand Ducal Palace – ceremonial residence (summer tours).
2. Notre-Dame Cathedral – 17th-century landmark.
3. Chemin de la Corniche – panoramic city walls.
4. Bock Casemates – historic fortifications.
5. Pfaffenthal Panoramic Elevator – view over the Alzette valley.
6. Place d’Armes – central square with cafés.
7. MNHA – National Museum of History and Art.
8. MUDAM – contemporary art museum in Kirchberg.
9. Philharmonie Luxembourg – striking concert hall.
10. Grund – atmospheric riverside district.

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10 Best Hotels in Luxembourg City

Well-located, guest-favored stays for business and leisure. Jump to map

1. Le Royal Hotels & Resorts – classic luxury near the city center.
2. Sofitel Luxembourg Le Grand Ducal – skyline views over the valley.
3. Sofitel Luxembourg Europe – Kirchberg district.
4. Hotel Le Place d’Armes – boutique luxury by the square.
5. Meliá Luxembourg – modern hotel by MUDAM.
6. Park Inn by Radisson Luxembourg City – central and convenient.
7. Mama Shelter Luxembourg – playful design in Kirchberg.
8. DoubleTree by Hilton Luxembourg – quiet setting with pool.
9. Parc Hotel Alvisse – resort-style facilities.
10. Novotel Luxembourg Kirchberg – business-friendly base.

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