Luxembourg Summary Guide

Business Forms in Luxembourg

In July, 2006, the European Commission ordered the government of Luxembourg to dismantle its system of tax breaks for financial holding companies, after concluding that the preferential tax regime in favour of Luxembourg’s Exempt, Milliardaire and 1929 Financial Holding companies violated EC Treaty state aid rules.

The main business forms likely to be of interest to an independent are the limited liability company, joint stock company, general partnership, limited partnership and sole proprietorship. Overseas companies may operate through a branch office and holding companies are also permitted.

An individual can set up in business as a sole proprietor without having to undertake the administrative and bureaucratic procedures necessary to incorporate a company. If the independent in question is an EU citizen, the main requirements for a sole proprietor are to register for purposes of tax (including VAT if necessary). However, a sole proprietor has unlimited liability for the debts of the business and must ensure that all tax returns are completed properly and on time and that other commitments (eg social security contributions) are fulfilled.

Depending on the income of the business, corporate tax may be lower than personal income tax, especially at the higher end of the scale so this is worth considering.

A limited liability company (SARL) is the most popular incorporated form, although may be beyond the needs of a small independent. Shareholders must have fully paid capital of at least EUR12,400. Shareholders are liable up to the amount of their share capital.

There are a number of steps to follow when registering a new limited company, including the notarisation of deeds and documents, obtaining a business licence and registering with the Commercial Register. The average timescale for completion of the registration of a limited company is 24 days. Costs for the entire process are around EUR205 (excluding the cost of the services of a professional advisor).

Luxembourg law recognizes general partnerships, suitable either for professionals (such as accountants and lawyers) or family businesses. These partnerships must be registered with the Greffe du Tribunal de Commerce. There are two forms of partnership: Societe en Nom Collectif , and Societe Civile.

Luxembourg Summary Guide Contents

Luxembourg Summary

Luxembourg Summary Chart

Luxembourg Residence

Taxation of Business People in Luxembourg

Living and Doing Business in Luxembourg

Business Forms in Luxembourg

Latest Comments

Expat Brit

Hi,

I am facing a dilemma and would like to invite any reader to advise me.

I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.

In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.

However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?

If anyone has pertinent advice on these points, I’d be grateful to hear them.

TJM @ Eindhoven, NL

T. Dog

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Jersey vs. Malta??

Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary

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Purchasing investment-link insurance for my staff

Would that count as income tax to my staff? And would that count as expense to my company?Michael

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Irish crisis - effects on small business?

Hi all,

Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.

Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...

Thanks,Kate

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Living in France contracting to Australian company

I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD.
Do I pay tax in France or Australia or both ?
Any help or guidance would be much appreciated.France move

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