Frequently asked questions
What are the steps involved in setting up a company?
The steps for setting up a business will differ depending on the activity carried out.
In order to help entrepreneurs in their considerations, the Luxembourg government has put a step-by-step summary on the Guichet.lu website. You will find useful information on establishment authorisations, the stages of creation and the differences between the different forms of enterprise.
If you still have doubts or questions, our team can help you in all these steps.
When is a settlement permit required?
Companies or individuals wishing to carry out a professional economic activity must obtain an establishment permit.
This establishment permit is required for a business activity (e.g. trade, catering), a craft activity (e.g. food, construction, art) or certain liberal professions (e.g. surveyor, architect, engineer).
There are also other types of prior authorisations for other professions (e.g. doctors, dentists, lawyers).
How long does it take to set up a company?
An establishment permit is required, depending on how quickly the file is processed by the Ministry of the Economy. Is your file complete? Does the company have a suitable fixed business facility?
If your application is complete and meets the requirements, it can take up to 4 months to obtain the settlement permit. However, the usual time frame is 1.5 months.
The incorporation of the company can then be established within approximately 2 weeks.
If the company does not need an establishment permit, then it can be incorporated within one month.
How much does it cost to set up a company in Luxembourg?
For a company requiring incorporation before a notary, the costs can be estimated at between EUR 1,000 and EUR 1,200 (including notary fees for various documents and various stamps and fees).
For companies that do not require a notary's deed (e.g. a Sàrl-S), and if no assistance from an advisor is required, the costs of incorporating the company are very low and can be estimated at around EUR 200.
In addition, we offer comprehensive assistance in the various stages of company formation. This includes assistance in defining the project, choosing the company form, drafting the financial plan, assistance with the notary and banks, and assistance in applying for the establishment permit. You can benefit from our incorporation package for your limited company or limited liability company at EUR 1,000 (excluding VAT and notary fees).
Do you want to work as a self-employed person or as a company?
This is a complicated question because there is no right or wrong answer. It will depend on the activity, the objectives, the risk management and the development perspectives.
Each form has its advantages and disadvantages in terms of cost, risk management, development, etc.
Because each case is unique, don't hesitate to ask for a free, no-obligation initial meeting to discuss your project with us.
What is a family asset management company in Luxembourg (SPF Luxembourg)?
The SPF is an investment company intended only for natural persons acting in the context of the management of their private assets and whose activity must be limited to the acquisition, holding, management and realisation of financial assets, to the exclusion of any commercial activity.
The SPF is not subject to Luxembourg income tax or wealth tax. However, it is liable for the subscription tax.
This particular regime can be interesting in the context of estate planning or for the management of financial assets.
What is a société civile immobilière (SCI)?
The SCI is a type of company used mainly for the management of real estate assets. However, it can also be used to hold financial or movable assets, to the exclusion of any commercial activity.
The SCI is not subject to income tax in Luxembourg nor to wealth tax. This type of company is fiscally transparent, i.e. the partners will be taxed directly in their own right.
The SCI in Luxembourg does not have a minimum capital requirement, and can be established by private deed or before a notary.
What is an auditor in Luxembourg and what is his role?
The auditor is one of the bodies that can be found, in particular, in Public Limited Companies, Limited Liability Companies (also Sàrl-S) and Partnerships limited by shares.
The auditor is appointed for a period of 6 years and has a role of supervision and control of the company. The auditor must also report to the shareholders or partners the absence of publication of accounts, losses exceeding half of the share capital or the absence of a management body.
Finally, the auditor cannot interfere in the management of the company. However, his liability towards third parties or the company is similar to that of the managers or directors.
When do I need an auditor?
The number of auditors required depends on the form of the company and will be :
- 1 commissioner for the Société anonyme (SA) ;
- 1 auditor for the Limited Liability Company (LLC) and Simplified Limited Liability Company (LLC-S) with more than 60 partners (otherwise no auditor required);
- At least 3 commissioners in the form of a supervisory board for the Société en commandite par actions (SCA).
The statutory auditor will be replaced by an approved auditor if the supervised company is no longer considered a small company on the basis of the criteria laid down by law.
Do you need to appoint an auditor or a liquidator? WAT Fiducary brings you all its expertise.
When should I have an independent auditor?
An approved auditor must be appointed by the general meeting when the company is no longer considered a small company on the basis of the criteria set by law.
The approved auditor is not, unlike the auditor, an organ of the company and must be independent of the company.
Its role is to give an opinion on the accounts for a financial year and the management report as to their accuracy and compliance with legal requirements. It is not the role of the auditor to supervise the affairs of the company.
Finally, a certified auditor is also required when the company has to prepare consolidated accounts.
What are the VAT rates in Luxembourg?
Currently, the 4 VAT rates applicable in Luxembourg are the following:
- 16% - standard rate - everything not included in other rates
- 13% - intermediate rate - wines 13° or less, solid mineral fuels, securities custody and management, credit management,...
- 7% - reduced rate - Gas, electricity, firewood, hairdressing, heat supplied by heating network, plants,...
- 3% - super-reduced rate - food products (except alcoholic beverages), books and newspapers, water supply, restaurant services (except alcohol), passenger transport,...
Do not hesitate to ask your accountant for advice on the VAT rate to apply.
What is the wealth tax?
The wealth tax in Luxembourg is a tax that affects SAs, Sàrl, SCAs and SEs and is calculated on the basis of the company's wealth and not on its result.
In addition, since 1 January 2009, theer On 1 January 2016, a minimum wealth tax is applied depending on the company's activity and balance sheet total. It varies from EUR 535 to EUR 32,100.
Finally, companies liable for wealth tax can reduce it by setting aside a five-year reserve equivalent to five times the amount of the desired reduction (subject to conditions).
Do not hesitate to ask our team for a tax simulation before the end of your financial year.
What is the corporate tax rate in Luxembourg?
In 1er As of 1 January 2020, the overall corporate income tax rate is 22.80% for the commune of Luxembourg.
This is to be broken down into two parts:
- The income tax of the communities which amounts to 16.05% (15% +7% contribution to the employment fund);
- The communal commercial tax which varies according to the communes. It is 6.75% for the commune of Luxembourg.
It should be noted that a company may be subject to different rates of municipal business tax if it operates in several municipalities.
When should consolidated accounts be prepared?
A parent company must prepare consolidated accounts if it has a majority of the voting rights in its subsidiary or if it controls the subsidiary in some other way (through the ability to appoint or remove members of the management or supervisory body, or through an agreement with other shareholders).
This obligation applies to Public Limited Companies, Limited Liability Companies, Partnerships limited by shares as well as to certain General Partnerships and Limited Partnerships.
Insurance and reinsurance companies and credit institutions are exempt.
Our team prepares the consolidation package for you, determines the consolidation methods, prepares the accounts and assists with the audit.
What are the consolidation exemptions?
There are 3 main possible exemptions.
The small group exemption, the subgroup exemption (consolidation at a higher level), the temporary holding exemption (holding for the purpose of a subsequent disposal).
The choice of the applied consolidation exemption will have to be mentioned in the annual accounts of the Luxembourg parent company.
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