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Nominee Director Included Nominee Shareholder Included Secretary Included Nominee Director Included Nominee Shareholder Included Secretary Included 
Incorporation time: 19 days
Shelf companies: Yes
Accounting: Yes
Secretary: Yes
Nominee Shareholder: Yes
Nominee director: Yes
Tax 29%
Luxembourg, or the Grand Duchy of Luxembourg, is a small country (2,586 km2) located between France, Germany and Belgium. Luxembourg has a varied culture, with three official languages: French, German and Luxembourgish. Luxembourg is one of the founders of the European Union and is well-known for its diverse economy, as well as for its GDP per capita, the highest in the world.
Luxembourg enjoys an excellent reputation internationally, but it should be noted that its taxation is not lower than other European countries. However, its tax system is very generous for a certain type of onshore company: a holding company.
Indeed, Luxembourg holding companies are exempt from tax, as are the dividends paid to them. These companies are known in Luxembourg as SOPARFI and there are 12,000 of them. It is, however, possible to create a limited liability company, a limited company, a venture capital investment company, a branch or a representative office. Luxembourg also provides its companies with a high level of confidentiality and high-quality banking secrecy.
Luxembourg is a unique jurisdiction because each solution must be individually tailored to the client’s needs. In Luxembourg the domiciliary agent as well as the directors and managers are responsible for the actions of the company and because of this Luxembourg is most suitable for sizeable projects where the founders wish to have a presence on site. This jurisdiction is mainly used by holding companies and investment funds rather than for trading companies.
To create a company in Luxembourg, it is necessary to complete 6 procedures and wait 19 days.
Legal Entity | Capital | Number of Shareholders, Members or Partners |
---|---|---|
Limited liability company (SARL) | EUR 12,394 minimum | Minimum of two shareholders, maximum of 40. Limited liability. |
Public limited company (SA) | EUR 30,986 minimum | At least one shareholder. Limited liability. |
General partnership (SNC) | Not Applicable | Minimum 2 partners. Unlimited, joint and several liability |
Limited partnership (SC) | Not Applicable | Minimum of two partners (general or limited). General partner must assume unlimited liability but all limited partners enjoy limited liability. |
Cooperative (SCOP) | No minimum capital | Minimum seven partners, unlimited liability. |
Company directors must be Luxembourg residents or nationals. A director is wholly liable for the company’s actions. It is possible to appoint a nominee director but he must be involved in and fully understand the company’s activity.
Luxembourg’s economy is dominated by the financial sector (approximately 50% of GDP) and by tax benefits that attract foreign investors. But this strength can also be a weakness, and the 2008 global financial crisis has not spared the country, which was plunged into recession. Nevertheless, due to strong domestic demand and public investment, Luxembourg has been able to manage a quiet return to growth, estimated at 3% for 2014.
The country relies on its highly developed tertiary sector (83% of GDP) and on the finance and real estate sectors. The country is the world’s 2nd largest investment fund destination. The industrial sector accounts for 16% of GDP and focuses primarily on the production of iron and steel, as well as chemicals, plastics and engineering. Finally, the primary sector, agriculture, is insignificant with less than 1% of GDP. The agricultural sector focuses on wine, cereals and potatoes.
Due to its geographical location, Luxembourg trades almost exclusively with its European neighbours including the export of industrial products. For some time, the Government has been trying to diversify its exports by creating business partnerships with Asian countries.
Luxembourg’s Economic Strengths
Luxembourg’s Economic Weaknesses
Luxembourg is currently trying to diversify its economy, which is currently overly dependent upon financial services. It hopes to diversify its economy and attract high value business especially in the electronics sector.
Luxembourg is a member of the European Union, the World Trade Organization and the Organization for Economic Cooperation and Development. The country’s import rules and customs standards are therefore those of the European Union, which promotes free international trade but maintain a level of control. Thus, quality and transparency restrictions and requirements are applied to agricultural products from outside of the European Union: the presence of Genetically Modified Organisms (GMOs) must be indicated on the packaging and hormone-fed beef, for example, is forbidden. Tariffs are not applied between EU member states, and are relatively low for non-members (4.2% on average).
The country has concluded trade agreements with various countries including the Mediterranean agreements, the ACP Agreements (which remove most customs duties for developing countries in Africa, the Caribbean and the Pacific) and the Generalised System of Preferences. The importation of goods into the European Union requires an Entry Summary Declaration for the Import Control System aimed at encouraging more trade in goods, which is promoted by the World Customs Organisation.
Retail in Luxembourg has a small market, but the country has one of the highest levels of purchasing power in the world. Consumer spending is high, up to 70% more than in Belgium or the Netherlands. Currently, the retail sector is occupied by three key players: Cactus, Louis Delhaize and Auchan. Since it has no coastline, the country must rely on an extensive and very well maintained road network to transport goods and transport by train is on the increase. In addition to road transport Luxembourg also operates domestic airports.
Luxembourg’s industry is dominated by the production of plastic and chemical products. Steel production and the production of mineral products are also primary industrial sectors.
In Luxembourg, the working day may not exceed ten hours and the working week is limited to 40 hours.
Although permanent contracts are most common, fixed-term contracts are also possible; however, the latter are highly regulated by law. The retirement age is 65 and the minimum wage is calculated according to the employee’s age and qualifications, but the minimum level is 1,610 EUR.
Social insurance contributions paid by the employer vary between 12.61% and 14.86% and between 11.80% and 14.05% are contributed by the employee.
The two main trade unions in Luxembourg are the LCGB and the OGBL and 50% of the employees are members.