Setting up a business in Luxembourg

Conditions for Accessing the Profession

To carry out a commercial, artisanal, or industrial activity in Luxembourg, it is mandatory to obtain an establishment authorization. This requirement also applies to certain liberal professions and specific activities that may require additional permits or approvals. The authorization, issued under specific conditions, ensures professional qualifications, good standing, and the effective and permanent management of the business in Luxembourg.

The application can be submitted online via MyGuichet.lu (requiring a LuxTrust certificate), allowing you to pay the €50 administrative fee conveniently. Alternatively, the form can be sent by post to the Ministry of the Economy, Establishment Authorization Service.

However, certain professions are exempt from this requirement. The list of professions requiring an establishment authorization is available online. In case of doubt, it is advisable to consult government resources, contact the Ministry of the Economy, or seek assistance from the House of Entrepreneurship. The latter offers free support to guide individuals through the administrative process.

Legal forms of companies

When creating a business in Luxembourg, it is essential to choose the legal structure that best suits your activity and needs. Here are the main options:

• Sole proprietorship: The entrepreneur operates under their own name as an artisan, trader, or self-employed professional. This structure, with no minimum capital requirement or separate legal personality, means the entrepreneur is fully liable for the business's debts with their personal assets. It is strongly recommended to take out professional liability insurance in this case.
• Private limited company (SARL): A popular choice, the SARL limits the liability of shareholders to their contributions, requiring a minimum capital of €12,000. It is suitable for small and medium-sized enterprises and can have between 2 and 100 shareholders.
• Simplified private limited company (SARL-S): Ideal for individual entrepreneurs, this simplified version requires a starting capital of only €1 to €12,000. It offers a quick setup process without the need for a notary.
• Public limited company (SA): Designed for large enterprises, the SA requires a minimum share capital of €30,000. Shareholders' liability is limited to their contributions, and this structure offers significant flexibility for raising capital.
• Limited partnership (SECS): This structure combines general partners, who are fully liable for debts, and limited partners, whose liability is restricted to their contributions. It is well-suited for attracting investors while maintaining control of the business.
• General partnership (SENC): Partners are jointly and fully liable for the company's debts. No minimum capital is required, but the transfer of shares requires the approval of all partners.

These legal structures are the most common, but other options exist, particularly for specific activities. If you are unsure, it is recommended to seek advice from the House of Entrepreneurship, which offers free support. The legal structure of a business can also be modified at any time, subject to additional fees.

Additionally, the Chamber of Commerce of Luxembourg hosts a free weekly webinar titled “How to Start your Business in Luxembourg?”. Available in both French and English, this webinar provides detailed information on starting a business and allows participants to ask questions directly to an advisor.

Creation costs

Apart from the €50 administrative fee required to obtain the establishment authorization, there are no specific costs associated with starting a business in Luxembourg, except for commercial companies. This type of company is subject to creation fees, as its articles of incorporation must be notarized. Upon incorporation, modification of the statutes, or transfer of the registered office within Luxembourg, the entrepreneur must pay a fixed registration fee of €75, in addition to notary fees. It should also be noted that other costs may apply, such as those for publication in the Trade and Companies Register (RCS).

It is therefore advisable to gather detailed information beforehand, based on your situation and choices, to prepare a precise budget prior to starting the business and better anticipate any potential costs specific to your circumstances.

Entry into operation

Businesses established in another member state of the European Economic Area (EEA) or Switzerland can carry out their activities on an occasional or temporary basis in Luxembourg without having a permanent establishment. However, artisans and industrial companies must notify their service provision to the General Directorate for SMEs, Crafts, and Commerce before commencing their work. This notification must be accompanied by a CE certificate issued by the competent authority in the country of origin, or any other document proving the declarant's authorization to conduct this activity in their home country, as well as proof of payment of an administrative fee. A certificate of nationality, a copy of the declarant's criminal record, and proof that they have conducted these activities for at least two of the past ten years may also be required.

Businesses established outside the European Union are required to obtain an establishment authorization to conduct economic activities in Luxembourg.

Business license

The application for the business license can either be made at the Direction générale PME et entrepreneuriat or online through the guichet.lu service. You therefore have to produce documents certifying your professional qualification in accordance with the selected activity, your professional integrity, a copy of your identity card, proof of payment of a chancery tax and draft statutes in the case of a company.

Professional integrity

The conditions of professional integrity must be met by the manager or director of the company. This also includes individuals holding the majority of shares or those able to exert significant influence over the management of the company. These conditions vary depending on the status of the manager or director.

• If the manager has been residing in Luxembourg for more than 10 years, the following documents must be included in the application for an establishment authorization:
  • a declaration on honor regarding any managerial roles held in companies over the past three years, including serving as a director in a Luxembourg company, holding shares in a Luxembourg company, and/or exerting significant influence on a business;
  • a Luxembourg criminal record extract (n°3).
• If the manager is a non-resident or has been residing in Luxembourg for less than 10 years, they must provide:
  • a declaration on honor regarding any managerial roles held in companies over the past three years;
  • a recent and unrestricted non-bankruptcy declaration made before a notary (depending on the company's status), certifying that they have not been involved in personal or corporate bankruptcy;
  • a criminal record extract or an equivalent certificate of good conduct issued by the state(s) where they have resided over the past 10 years, or, failing that, an affidavit.

Exceptions

Certain service activities with a predominant intellectual focus are not required to obtain an establishment authorization. Professionals concerned may submit a preliminary request to the General Directorate for SME, Craft, and Retail to confirm their exemption.

Subsequently, affiliation with social security will be under the status of self-employed. If the professional intends to hire staff, they must file an operational declaration. Finally, if they anticipate their annual turnover will exceed €35,000, they must register for VAT.

It is recommended to consult official sources for detailed and up-to-date information on these procedures.

Trade name

Before setting up a company, you are required to choose a trade name for your sole proprietorship or company. Registration can be made on the Trade and Companies Register (RCS) website. Once the application has been made, the free or non-free trade name will be issued within 20 days. You can then download it. It is important to note that the certificate of availability does not reserve the name; any other person can use it until it is officially registered with the Trade and Companies Register (RCS). Furthermore, requests for certificates of availability are subject to administrative fees. It is therefore recommended to proceed quickly with the registration process after obtaining the certificate.

Establishing a Sole Proprietorship

After clearly defining the legal structure of the business, the next step is to register the sole proprietorship with the Trade and Companies Register (RCS).

The entrepreneur must register as a natural person via an electronic filing with the RCS. This process can also be carried out at the filing assistance office provided by the Luxembourg Business Registers (LBR), subject to additional fees.

The registration file must include the following documents:

• requisition form generated by the electronic filing system, duly completed;
• establishment authorization, if applicable;
• marriage certificate or family record book, if applicable;
• marriage contract, if applicable;
• declaration of acquisition of the business, if applicable;
• power of attorney with legalized signature, if applicable;
• identity document;
• proxy for the person authorized to register the entrepreneur, if applicable;
• Luxembourg national identification number (matricule), mandatory since November 12, 2024, for all natural persons registered or to be registered with the RCS.

Once registered, the entrepreneur must register for VAT with the Registration Duties, Estates and VAT Authority, even if they are not liable for VAT (under the " franchisé " status, a term referring to VAT exemption and unrelated to its usual meaning in English). They must then affiliate as a self-employed individual with the Centre Commun de la Sécurité Sociale (CCSS).

Block and unblock the capital

The minimum capital required for the setting up of a business has to be deposited in a bank account before the signing of the company's constitution. Hence, the deposit is blocked until the company's setting up. This process is supported by a blocking certificate which has to be produced to the notary before the constitution. The release is possible only upon presentation of a release certificate issued by the notary of the final version of the company's articles and of any missing documents required by the bank and information on the company's economic beneficiaries.

Constitution

The articles of incorporation define the operational framework of the company. For SARLs, SAs, SEs, and SECAs, the statutes must be drafted before a notary. In contrast, SENCs, SECSs, cooperatives, and civil companies may have their statutes drafted either privately or before a notary.

Certain clauses are prohibited and considered void, including those that:

• allocate all profits or losses to a single partner;
• exempt certain partners from contributing to losses;
• deprive certain partners of any rights to profits.

Newly established companies or those amending their statutes must file their articles of incorporation for publication and registration with the Trade and Companies Register (RCS). Privately drafted documents must be scanned and submitted electronically to the RCS, accompanied by the requisition form generated by the system. The filing assistance office of the RCS is also available for this purpose.

For notarial acts, the notary is responsible for submitting them to the RCS and registering them with the Registration Duties, Estates and VAT Authority within 15 days of signing. Publication in the Electronic Register of Companies and Associations (RESA) occurs either on the day of filing or on a date specified by the filer, within a maximum of 15 days.

VAT registration

VAT registration can only be completed if the business has opened a bank account with a Luxembourgish or foreign bank. Alongside social security registration, this is an essential and mandatory step in the process of starting a business in Luxembourg. The initial declaration must be submitted by the entrepreneur to the competent tax office, either online via MyGuichet.lu or by mail using the forms available online.

Companies must include with their declaration a copy of the articles of incorporation in French or German, as well as a copy of the identity documents of the shareholders mentioned in the articles of incorporation and/or the company's managers/administrators. Sole proprietors, on the other hand, must provide a copy of their identity documents.

Sole proprietors are not subject to a separate procedure for obtaining a VAT number; they must register directly with the Registration Duties, Estates and VAT Authority (AED). This registration is mandatory for all businesses, including those with an annual turnover below €35,000. Indeed, even if these businesses can benefit from the franchise regime (meaning they do not charge or collect VAT), they are still required to register with the AED and obtain a VAT number. They must also report their annual turnover to the AED each year. The VAT number must appear on invoices issued by the company, even if no VAT is charged.

It is recommended to complete VAT registration within 15 days of starting the business's economic activity.

Social Security

All businesses in Luxembourg must register with the Centre Commun de la Sécurité Sociale (CCSS). This registration must be completed before starting any economic activity. The obligation applies to both sole proprietorships and companies. Social security contributions include payments for health insurance, pension insurance, and work accident insurance. Certain individuals may qualify for exemptions or reductions, such as new self-employed workers under specific schemes. It is recommended to consult the CCSS or a specialized advisor to understand applicable contributions and potential exemptions.

For sole proprietorships, registration is completed by submitting an entry declaration to the CCSS as a self-employed worker. Social security contributions are calculated based on the declared income.

In the case of hiring employees, businesses must submit an operating declaration to the CCSS within eight days of the first employee's start date. An operating certificate is then issued, containing the company's registration number and the risk class associated with its activities. For each new hire, the business must submit an entry declaration to register the new employee with social security.

Business Creation Support

In Luxembourg, entrepreneurs can benefit from various forms of support for starting their businesses, such as financial subsidies or personalized guidance. For example, the House of Entrepreneurship, an initiative of the Chamber of Commerce, offers comprehensive support, from the initial idea to the launch of the business, with tailored advice and free thematic workshops.

Additionally, specific financial aids are available, such as the Support for first-time business start-ups, granted under certain conditions to newly created micro-enterprises in the trade and craft sectors. If eligible, this subsidy is provided as six monthly payments of €2,000.

For reliable and tailored information, it is recommended to consult the Guichet.lu portal, which centralizes administrative procedures and available support for entrepreneurs in Luxembourg. The Chamber of Commerce and the House of Startups are also valuable resources for successfully carrying out your business creation project.

Useful links:

Trade and Companies Register (RCS)
MyGuichet (forms and online procedures)
Guichet.lu (information from the gouvernement)
Legal forms of business in Luxembourg
House of Entrepreneurship 
House of Startups
Chambre de commerce du Luxembourg
Ministry of Economy of Luxembourg
Luxembourg Business Registers (LBR)
Registration Duties, Estates and VAT Authority
Inscription à la TVA
Portail de la fisclaité indirecte
https://ccss.public.lu/en.html (CCSS)
Chamber of Trade
Chamber of Notaries
Luxembourg Portal for Innovation and Research