Luxembourg, with its strategic location in the heart of Europe, attractive tax regime, and business-friendly environment, has become a magnet for foreign entrepreneurs. If you’re considering starting a business in Luxembourg as a foreigner, you’ll be pleased to know that the Grand Duchy welcomes international business owners with open arms. This comprehensive guide walks you through the entire process, from understanding legal requirements to registering your company and fulfilling tax obligations.
Legal Requirements for Foreign Entrepreneurs
Before diving into the specifics of company formation, it’s essential to understand the legal framework for foreigners starting businesses in Luxembourg.
Residency Rules for Business Owners
While Luxembourg allows non-residents to own businesses, managing a company effectively often requires some form of local presence. The requirements vary based on your nationality and the type of business you plan to establish.
EU/EFTA Citizens
If you’re a citizen of an EU or EFTA country (Iceland, Liechtenstein, Norway, or Switzerland), you benefit from freedom of establishment. This means you can:
- Start a business without additional immigration permits
- Reside in Luxembourg if you register with your local commune within 90 days of arrival
- Apply for a business permit directly without residence complications
Non-EU/EFTA Citizens
If you come from outside the EU/EFTA, additional steps are required:
- Obtain a temporary authorization to stay before entering Luxembourg
- Apply for a residence permit for self-employed individuals
- Demonstrate sufficient financial resources and business viability
- Prove your qualifications and experience in your business field
Visa Types for Entrepreneurs
Luxembourg doesn’t offer a specific “entrepreneur visa,” but there are suitable options for business founders:
| Visa/Permit Type | Suitable For | Duration | Key Requirements |
| Residence Permit for Self-Employed Activity | Entrepreneurs, freelancers, business owners | Initially 3 years, renewable | Business plan, proof of qualifications, financial resources |
| Investor Residence Permit | Substantial investors (€500,000+) | 3 years, renewable | Investment proof, job creation plan |
| D-Visa (National Visa) | Initial entry for business setup | 90 days | Temporary authorization to stay |
Need Help With Your Residence Permit?
Navigating Luxembourg’s immigration requirements can be complex. Our team of experts can guide you through the entire process.
Mandatory Registrations
All businesses in Luxembourg, regardless of the owner’s nationality, must complete these essential registrations:
- Obtain a business permit (authorization to establish) from the Ministry of Economy
- Register with the Luxembourg Business Registers (LBR)
- Register for VAT if your annual turnover exceeds €35,000
- Register with the Joint Social Security Center (CCSS) if you have employees
- Register with the tax authorities (Administration des contributions directes)
Business Structures for Foreign Founders
Choosing the right business structure is crucial for your company’s success. Luxembourg offers several options, each with distinct advantages and requirements.
SARL (Société à responsabilité limitée)
The Private Limited Liability Company is the most popular choice for foreign entrepreneurs due to its flexibility and relatively straightforward setup.
Advantages
- Limited liability (personal assets protected)
- Minimum capital requirement: €12,000 (fully paid up)
- Can be formed with a single shareholder
- Simplified management structure
- No nationality requirements for shareholders
Limitations
- Maximum of 100 shareholders
- Shares cannot be publicly traded
- Transfer of shares is restricted
- Articles of association must be notarized
- Annual financial reporting required
SARL-S (Société à responsabilité limitée simplifiée)
Introduced in 2016, the Simplified Limited Liability Company is designed for entrepreneurs with smaller budgets and simpler business models.
Entrepreneur reviewing SARL-S documents to start a business in Luxembourg as a foreigner
Advantages
- Minimal capital requirement (€1 to €12,000)
- Simplified formation process
- Reduced notary and registration costs
- Limited liability protection
- Ideal for startups and small businesses
Limitations
- Only natural persons can be shareholders
- Limited to commercial activities
- Cannot be used for regulated professions
- Maximum of 100 shareholders
- Must convert to SARL if capital exceeds €12,000
SA (Société Anonyme)
The Public Limited Company is suitable for larger operations and businesses planning significant growth or public trading.
Advantages
- Shares can be freely transferred and publicly traded
- Unlimited number of shareholders
- Enhanced credibility with partners and clients
- Limited liability for shareholders
- Flexible management structure options
Limitations
- Higher minimum capital (€30,000, 25% paid up)
- More complex governance requirements
- Requires at least one director
- Mandatory annual audits in many cases
- Higher formation and maintenance costs
Sole Proprietorship
For individual entrepreneurs who prefer simplicity and direct control, a sole proprietorship offers a straightforward option.
Advantages
- No minimum capital requirement
- Simple setup and administration
- Direct control over business decisions
- Less paperwork and lower setup costs
- No separate legal entity required
Limitations
- Unlimited personal liability for business debts
- Difficult to raise capital
- Business terminates with owner’s death
- May appear less professional to some clients
- All profits taxed as personal income
Unsure Which Business Structure Is Right for You?
Our business formation specialists can help you select the optimal structure based on your specific needs, goals, and circumstances.
Societal Impact Company (SIS)
For entrepreneurs with social or environmental goals, Luxembourg offers the Societal Impact Company structure.
Social entrepreneurs discussing a Societal Impact Company formation to start a business in Luxembourg as a foreigner
This innovative structure allows businesses to balance profit-making with social impact. The SIS can be incorporated as an SA, SARL, or cooperative, with at least 50% of profits reinvested in the social mission. It offers tax advantages and access to specific funding opportunities for social enterprises.
Step-by-Step Process to Start a Business in Luxembourg
Following a systematic approach will help you navigate the process of establishing your business in Luxembourg efficiently.
Planning Phase
- Develop a detailed business plan
- Research the Luxembourg market
- Secure necessary funding
- Choose your business structure
- Select a company name
Preparation Phase
- Obtain necessary visas/permits
- Draft articles of association
- Secure a registered address
- Open a bank account
- Deposit share capital
Registration Phase
- Notarize company documents
- Register with the LBR
- Obtain business permit
- Register for taxes and VAT
- Register with social security
1. Business Plan Approval
While not mandatory for all businesses, a solid business plan is essential for non-EU entrepreneurs applying for residence permits and can help with securing financing.
Key components of an effective Luxembourg business plan:
- Executive summary with clear business concept
- Market analysis specific to Luxembourg and the Greater Region
- Organizational structure and management team
- Product or service description
- Marketing and sales strategy
- Financial projections for at least 3 years
- Funding requirements and sources
- Risk assessment and mitigation strategies
2. Securing Your Business Permit
Almost all commercial activities in Luxembourg require a business permit (autorisation d’établissement), which verifies your professional qualifications and business integrity.
To obtain a business permit, you must demonstrate:
- Professional qualifications or relevant experience in your field
- Knowledge of business management (for certain activities)
- Professional integrity (clean criminal record)
- A physical establishment address in Luxembourg
- For non-EU citizens: valid residence permit or authorization to stay
Applications are submitted to the General Directorate for SMEs and Entrepreneurship at the Ministry of Economy, either online through MyGuichet.lu or by mail. Processing typically takes 2-3 months.
3. Company Name Verification and Reservation
Before registration, verify that your chosen company name is available and complies with Luxembourg naming regulations.
You can check name availability through the Luxembourg Business Registers (LBR) website and reserve a name for up to 20 days by requesting a certificate of name availability.
4. Articles of Association
The articles of association (statuts) define your company’s rules and structure. For most company types, these must be drafted in French, German, or Luxembourgish and notarized.
Key elements to include:
- Company name, legal form, and registered office
- Corporate purpose (business activities)
- Duration of the company (typically unlimited)
- Amount of share capital and distribution
- Management structure and decision-making processes
- Financial year details
- Procedures for shareholder meetings
5. Bank Account Opening and Capital Deposit
For limited companies (SARL, SA), you must open a corporate bank account and deposit the minimum required capital before incorporation.
Entrepreneur opening a business bank account in Luxembourg to start a business as a foreigner
Documents typically required for business account opening:
- Draft articles of association
- Identification documents for all directors and significant shareholders
- Proof of address for the company and all signatories
- Business plan and company structure chart
- Source of funds documentation
Note: Most Luxembourg banks require in-person meetings to open business accounts, though some offer initial applications online.
Need Assistance with Bank Account Opening?
Bank account opening can be challenging for foreign entrepreneurs. Our banking specialists can facilitate introductions to suitable banks and guide you through the process.
6. Notarization of Company Documents
For SARL and SA companies, the articles of association must be executed before a Luxembourg notary. The notary verifies the legality of the documents and the identity of the signatories.
The notarization process includes:
- Verification of the bank certificate confirming capital deposit
- Review of the articles of association
- Confirmation of shareholder identities
- Official notarization of the deed of incorporation
- Registration with tax authorities
7. Registration with the Luxembourg Business Registers (LBR)
Following notarization, your company must be registered with the Luxembourg Business Registers (LBR) to gain legal personality.
The notary typically handles this registration, which includes:
- Filing the notarized articles of association
- Registering company details (name, address, purpose, directors)
- Obtaining the company registration number (RCS number)
- Publishing the incorporation in the Electronic Compendium of Companies and Associations (RESA)
8. Tax and Social Security Registration
After incorporation, your company must register with various tax and social security authorities.
| Registration | Authority | Deadline | Requirements |
| Corporate Tax | Administration des Contributions Directes (ACD) | Automatic after LBR registration | Tax ID issued automatically |
| VAT | Administration de l’Enregistrement et des Domaines (AED) | Within 15 days of starting activities | Application form, company documents |
| Social Security | Centre Commun de la Sécurité Sociale (CCSS) | Within 8 days of hiring employees | Employee details, employment contracts |
Challenges for Foreign Entrepreneurs in Luxembourg
While Luxembourg offers many advantages for business owners, foreign entrepreneurs should be prepared for several challenges.
Language Barriers
Luxembourg has three official languages: Luxembourgish, French, and German. While English is widely spoken in business circles, many official documents and communications are in French or German.
Multilingual business meeting in Luxembourg showing language diversity when starting a business as a foreigner
Language tips for foreign entrepreneurs:
- Budget for professional translation of official documents
- Consider hiring bilingual staff for customer-facing roles
- Learn basic French or German for day-to-day business interactions
- Use certified translators for legal and regulatory communications
- Many government services offer English support, but not all
Capital Requirements
The minimum capital requirements for limited companies can be challenging for some entrepreneurs:
- SARL: €12,000 (fully paid up at incorporation)
- SA: €30,000 (at least 25% paid up, minimum €7,500)
- SARL-S: €1 to €12,000 (fully paid up)
- Additional working capital needed for operations
Explore Funding Options for Your Luxembourg Business
From government grants to private investors, Luxembourg offers various funding sources for new businesses.
Finding Office Space
Luxembourg has one of Europe’s most expensive real estate markets, making office space a significant expense for new businesses.
Alternatives to traditional office leases include:
- Co-working spaces (from €250/month for a desk)
- Business incubators with subsidized rates
- Virtual office services with meeting room access
- Serviced offices with flexible terms
- Office sharing with complementary businesses
Local Competition
Despite its small size, Luxembourg has a sophisticated business environment with established local and international competitors.
Luxembourg business district showing competitive environment for foreigners starting a business
To stand out in the Luxembourg market:
- Conduct thorough market research before entry
- Identify specific niches underserved by existing businesses
- Leverage your international experience and connections
- Build relationships with local business networks
- Consider partnering with established Luxembourg businesses
Administrative Complexity
Luxembourg’s business environment involves multiple regulatory bodies and compliance requirements that can be overwhelming for newcomers.
Common administrative challenges:
- Navigating multiple government agencies with different procedures
- Understanding complex tax reporting requirements
- Complying with EU and Luxembourg-specific regulations
- Managing deadlines for various filings and renewals
- Keeping up with regulatory changes affecting your business
Success Stories: Foreign Entrepreneurs in Luxembourg
Many foreign entrepreneurs have successfully established thriving businesses in Luxembourg. Here are some inspiring examples:
Maria S. – FinTech Innovator
Originally from Spain, Maria launched her financial technology startup in Luxembourg in 2018. Despite having no local connections initially, she leveraged Luxembourg’s supportive startup ecosystem and proximity to financial institutions.
Key to success: Participated in the Fit4Start accelerator program, which provided €150,000 in funding and mentorship. Her company now employs 15 people and serves clients across Europe.
Ahmed K. – E-Commerce Entrepreneur
Ahmed relocated from Dubai to establish his e-commerce platform in Luxembourg in 2019. He chose Luxembourg for its central European location, excellent logistics infrastructure, and favorable tax environment.
Key to success: Formed strategic partnerships with Luxembourg logistics providers and leveraged the country’s multilingual workforce to serve customers across France, Germany, and Belgium in their native languages.
Elena and Victor T. – Sustainable Food Business
This Ukrainian couple started their organic food production company in 2020, structuring it as a Societal Impact Company (SIS). They focus on sustainable, locally-sourced products with minimal environmental impact.
Key to success: Obtained support from Luxembourg’s Ministry of the Economy’s “Fit 4 Sustainability” program and secured a loan from the SNCI (National Society for Credit and Investment).
“Luxembourg’s strategic location at the heart of Europe, combined with its supportive business environment and access to EU markets, made it the perfect place to grow our company internationally. The initial administrative hurdles were worth overcoming for the long-term benefits.”
Essential Resources for Foreign Entrepreneurs
Luxembourg offers numerous resources to help foreign entrepreneurs navigate the business formation process.
Government Resources
Luxembourg Business Registers (LBR)
Official registry for all Luxembourg companies, providing company information and handling registrations.
Website: www.lbr.lu
Services: Company registration, name availability checks, access to company documents
Guichet.lu
The official government portal for administrative procedures in Luxembourg.
Website: guichet.public.lu
Services: Online business permit applications, tax registrations, administrative procedures
House of Entrepreneurship
One-stop shop for entrepreneurs, offering guidance on all aspects of business creation and development.
Website: www.houseofentrepreneurship.lu
Services: Free consultations, administrative support, networking events
Immigration Directorate
Handles residence permits and immigration matters for non-EU entrepreneurs.
Website: maee.gouvernement.lu
Services: Residence permit applications, visa information, authorization to stay
Business Support Organizations
Luxembourg Chamber of Commerce
Professional chamber representing the interests of all commercial companies in Luxembourg.
Website: www.cc.lu
Services: Business advice, training programs, international development support
Luxinnovation
National innovation agency supporting businesses with innovation and R&D.
Website: www.luxinnovation.lu
Services: Startup support, funding guidance, sector-specific expertise
SNCI (Société Nationale de Crédit et d’Investissement)
Public banking institution specializing in medium and long-term financing of Luxembourg-based companies.
Website: www.snci.lu
Services: Business loans, equipment financing, innovation support
Ready to Start Your Luxembourg Business Journey?
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Frequently Asked Questions
Answers to common questions from foreign entrepreneurs about starting a business in Luxembourg.
Can I operate a Luxembourg business without being a resident?
Yes, non-residents can own Luxembourg companies, but there are practical considerations:
- Your company must have a registered office in Luxembourg
- For most business permits, you need to demonstrate that the business is effectively managed from Luxembourg
- Non-EU citizens typically need a residence permit to actively manage the business
- Some activities may require your physical presence in Luxembourg
Many entrepreneurs use local directors or representatives to fulfill residency requirements while maintaining ownership from abroad.
What tax benefits are available for startups in Luxembourg?
Luxembourg offers several tax advantages for new businesses:
- Competitive corporate tax rate (17% for income over €200,000)
- Extensive network of double tax treaties (over 80 countries)
- IP box regime offering 80% exemption on income from intellectual property
- Investment tax credits for qualifying assets
- R&D incentives including cash grants and tax deductions
- VAT registration threshold of €35,000 (beneficial for small businesses)
Additionally, startups can apply for specific support programs through Luxinnovation and the Ministry of Economy.
Are there industry restrictions for non-EU citizens starting businesses in Luxembourg?
Luxembourg generally doesn’t restrict foreign ownership in most sectors, but some regulated industries have additional requirements:
- Financial services: Require authorization from the CSSF (Commission de Surveillance du Secteur Financier)
- Insurance: Regulated by the CAA (Commissariat aux Assurances)
- Healthcare: May require specific professional qualifications recognized in Luxembourg
- Transportation: Special licenses and permits required
- Food service and retail: Health and safety certifications needed
Non-EU citizens face the same industry requirements as EU citizens but have additional immigration hurdles to overcome.
How long does the entire business formation process take in Luxembourg?
The timeline varies depending on your nationality, business type, and industry:
- EU citizens: 2-4 weeks for standard company formation
- Non-EU citizens: 3-6 months including residence permit process
- Regulated industries: Add 1-3 months for special authorizations
Key factors affecting timeline include business permit approval (2-3 months), bank account opening (2-4 weeks), and for non-EU citizens, residence permit processing (2-3 months).
What are the ongoing compliance requirements for Luxembourg companies?
Luxembourg companies must fulfill several ongoing obligations:
- Annual financial statements filed with the LBR within 7 months of year-end
- Corporate tax returns due by May 31 of the following year
- VAT returns (monthly, quarterly, or annual depending on turnover)
- Social security contributions for employees (monthly)
- Ultimate Beneficial Owner (UBO) register updates when ownership changes
- Annual business permit renewal (for certain activities)
Most companies engage local accounting and tax professionals to ensure compliance with these requirements.
Ready to Start Your Business in Luxembourg?
Luxembourg offers a strategic European location, business-friendly environment, and access to EU markets that make it an attractive destination for foreign entrepreneurs. While the process involves several steps and requirements, the benefits of establishing your business in this prosperous nation can be substantial.
By following the step-by-step process outlined in this guide and leveraging the available resources, you can successfully navigate the journey of starting a business in Luxembourg as a foreigner. Remember that professional assistance from legal, tax, and business advisors familiar with Luxembourg’s business environment can significantly streamline the process and help you avoid potential pitfalls.
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