Starting a business in Luxembourg
- Rank of 25
- 23
- Index score of 100
- 68
The case for Luxembourg
Luxembourg suits holding companies, investment funds, securitisation vehicles and groups that want an EU base with a strong reputation among banks and investors. The standard corporate income tax rate is 16% on income above €200,000, which becomes 23.87% in Luxembourg City once the 7% solidarity surcharge and the 6.75% municipal business tax are added. A standard SARL needs €12,000 of paid up capital and a notarial deed, and the registry fee is €105.91 plus VAT. Founders with a small trading business can use the SARL-S, which needs only €1 of capital but is open to individuals only.
Luxembourg suits less well a small company that wants a low tax bill with little activity on the ground. Commercial, craft and some professional activities need a business permit, which requires a real physical establishment and a manager present day to day, and banks apply strict onboarding checks. The main drawback is cost: World Bank data put Luxembourg's 2021 price level for household consumption at 184, where the world average is 100.
How a company is taxed
Corporate income tax is 16% on income above €200,000 and 14% up to €175,000. With the 7% solidarity surcharge and Luxembourg City's 6.75% municipal business tax, the combined rate is 23.87%. VAT is 17%. Progressive rates rise to 42% on income above €234,870. With the 9% solidarity surcharge for higher earners, the top marginal rate is 45.78%.
Setting up and running a company
Notary, then same day publication
An SARL is formed before a notary, who files the deed with the Trade and Companies Register. The registry fee is €105.91 plus VAT, and publication in the RESA follows on acceptance, normally the day of filing.
Real office for trading
Every company needs a registered office in Luxembourg. A business permit for commercial, craft and some professional activities needs a physical establishment and a manager present day to day.
Legitimate interest access
The beneficial ownership register closed to the public after the EU Court of Justice ruling of 22 November 2022. Authorities and obliged professionals have access, and journalists, AML organisations and likely counterparties can apply.
Self-employed permit
A non-EU owner who will run the business in person can apply for a self-employed residence permit, with a business plan, proof of resources and the business permit agreement in principle. A reply is due within 3 months.
Fees shown are government registry fees only. Agent, licence, office, audit and professional costs are additional and usually make up most of the cost of setting up.
Life in Luxembourg City
- Languages
- Luxembourgish, French and German are official languages, and English is widely used in finance and business.
- Flights
- Luxembourg Airport at Findel offers more than 100 non-stop destinations.
- Schools
- State schools are free and teach in Luxembourgish, German and French. Free public international schools and private international schools teach in English and other languages.
- Healthcare
- Residents are covered by the national health insurance fund (CNS) through work or self-employment. Patients usually pay the doctor and claim a partial refund.
- Banking
- Luxembourg has one of Europe's largest banking centres, but banks run strict checks on new corporate clients and expect real activity.
Wealth, inheritance and a family home
- Inheritance and gift tax
- Heirs in the direct line pay no inheritance tax on their legal share and a spouse or partner of at least 3 years pays 0%, while siblings start at 6% and unrelated heirs at 15%, with increases on larger shares; non-residents pay only on Luxembourg real estate, and gifts are taxed at rates that depend on the relationship.
- Wealth tax
- Individuals have paid no net wealth tax since 1 January 2006, though companies pay 0.5% net wealth tax and municipalities charge a property tax.
- Capital gains
- Gains on shares held more than 6 months are tax free unless the holding is above 10%, in which case they are taxed at half the average rate, and the sale of a main home is exempt.
- Personal income tax
- Progressive rates rise to 42% above €234,870, the 9% solidarity surcharge for higher earners takes the top rate to 45.78%, and half of qualifying dividends are exempt.
- Tax information exchange
- Luxembourg exchanges financial account data under the OECD Common Reporting Standard and has a FATCA agreement with the United States, so its banks report foreign account holders.
- Buying a home
- Foreigners can buy freely, registration and transcription duties are 7% of the price plus a 3% surcharge in Luxembourg City, and owner occupiers can set the Bëllegen Akt tax credit against these duties.
The Luxembourg dossier
About 30 pages on business and life there, with official sources.
Questions people ask about Luxembourg
Corporate income tax is 16% on taxable income above €200,000 and 14% up to €175,000. A 7% solidarity surcharge applies on top, and Luxembourg City charges 6.75% municipal business tax, so the combined rate there is 23.87%.
The government plans a further cut of one percentage point in corporate income tax from the 2027 tax year.
A standard SARL needs share capital of €12,000, fully subscribed and paid up when the company is formed. It can have between 1 and 100 shareholders, who may be individuals or companies.
The SARL-S is a simplified SARL with capital of €1 to €12,000. Only individuals can be shareholders and managers, a person can hold shares in only one SARL-S, it can be formed by private deed without a notary, and it needs a business permit first.
The notary files the deed electronically with the Trade and Companies Register within one month of signing. Publication in the RESA follows on acceptance, normally on the day of filing. A business permit, where needed, can take up to 3 months.
Commercial, craft and certain liberal professional activities need a business permit from the Ministry of the Economy. It costs €50 in stamp duty and requires a physical establishment in Luxembourg and a manager present day to day.
No. Public access ended after the EU Court of Justice ruling of 22 November 2022 in cases brought in Luxembourg. Under a law of 23 January 2025, authorities and obliged professionals have access, and journalists, AML organisations and likely counterparties can apply on legitimate interest grounds.
The top rate is 42% on income above €234,870. With the 9% solidarity surcharge for higher earners, the top marginal rate is 45.78%.
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