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Luxembourg Company Formation
Lying in the centre of Western Europe between Belgium, France and Germany, the Grand Duchy of Luxembourg covers an area of 2,586 square kilometres. It is one of the smallest Countries in Europe, but the countryside varies greatly, from the hilly Ardennes in the North, to a mineral rich and beautiful forest and farmlands in the South.
The Grand Duchy is an independent State and a founder member of the European Union. The location of the Duchy at the heart of the European Community provides easy access to some of Europe's largest financial and industrial centres, such as Paris, Frankfurt, Köln, Amsterdam, Brussels and Strasbourg.
Traditionally, the country has followed an open economic policy promoting international trade which has attracted foreign capital investment in the Duchy evidenced by a number of significant treaties signed by Luxembourg with its neighbours, such as the Belgian-Luxembourg Union (1921) (implementing common trade between the two countries) and the Benelux economic co-operation treaty (1958) (signed with the Netherlands and Belgium), leading towards more advantageous economic unification.
Luxembourg's reputation is as a trustworthy political and economic partner. The economic policy of Luxembourg is characterised by the highly professional and dynamic spirit of the country.
Historically, the economy has been largely influenced by the steel industry. In the early 1970s the government made significant efforts to diversify the economy in order to avoid the risk of over-reliance on this one industrial sector and diversify and attract foreign multinationals. As a result of this reform, the economy of the country has been growing rapidly and nowadays relies on a much broader broad range of industries such as chemistry, plastics and synthetic materials, mechanics, machine construction, processing of ferrous, non-ferrous metals, supplying parts to the automotive industry, precision instruments, as well as a burgeoning glass industry. All these industries improve the competitiveness of Luxembourg on the international market.
The most significant part of the Grand Duchy’s economy is its flourishing financial sector which comprise of more than 200 banks, 1,900 investment funds and 20,000 holding companies. The largest banks are Dexia-Bil, Fortis BGL, Kredietbank Luxembourg and a subsidiary of Belgian KBC. Luxembourg is considered to be one of the most important financial centres in Europe that offers the entire spectrum of financial services in both corporate and private banking. It is the third largest investment fund centre in the world.
A highly competitive tax regime, strict banking secrecy laws and international business environment have also made Luxembourg one of the leading locations for corporate headquarters and a highly suitable jurisdiction for holding companies. These holding companies are often very advantageous from a structural, administrative, financial and fiscal point of view. Insurance, private pension funds, securitisation and venture capital investment vehicles also represent a large part of the financial sector and as a result have increasingly become a main source of employment.
As a result of its continuous economic growth, Luxembourg residents have very favourable standards of living, with the one of the highest GDP (Gross Domestic Product) per inhabitant (approximately EUR 50 800 per inhabitant) and the highest social welfare per head. There is low inflation, low unemployment and a balanced budget.
The country is a representative democracy in the form of a constitutional monarchy headed by the Grand Duke Henri. The role of the Duke, however, is largely ceremonial. In practice the country is governed by the Cabinet of Ministers who exercise the executive power and by the Parliament which represents the legislative power in Luxembourg. The Cabinet of Ministers includes the Prime Minister, who serves as head of government. The Prime Minister is the leader of the political party or coalition of parties having the most seats in Parliament, known as the Chamber of Deputies. The members of the Chamber of Deputies are elected to a 5-year term. A second body, the Council of State (Conseil d'Etat), is composed of 21 ordinary citizens appointed by the Grand Duke, which advises the Chamber of Deputies in the drafting of legislation. However, the Council’s opinions have no binding effect.
The Grand Duchy is administratively divided into three districts, which are in turn divided into Cantons, Communes and Municipalities. Communes are administrative authorities possessing legal personality and administrating their patrimony. A Communal Council (Conseil Communal) is directly elected by the inhabitants. A Commune is administered by the mayor and the alderman (Collège des bourgmestres et échevins) chosen from the Communal councillors.
Luxembourg Company Information
Type Of Company
S.A.R.L. (Société à Responsabilitée Limitée) and S.A. (Société Anonyme).
PROCEDURE TO IN CORPORATE
The Articles of Incorporation (The Acte de Constitution) must be prepared in the form of a deed. This deed should include:
Description regarding the nature of the activities envisaged.
Copy of the police record (or equivalent) of the land of origin.
Personal declaration of non-bankruptcy, done under oath and in front of a notary.
Certified true copy of the studies diploma.
Attestation from the CEE regarding the activities done by the company in his own country duly conformed to the directive of 15/10/1968 (68/364/C.E.E) to be delivered by the Chamber of Commerce (or equivalent). (Normally, the person who requests a trading permit must be able to justify three years’ experience in the concerned activity.)
Copy of the inscription from the Register of Companies (in case of similar activity in another country).
Any other document in support to the above list.
A Certificate of Name Acceptability issued by the Trade Register is also required, together with a Certificate of Blockage produced by the proposed company's Luxembourg bankers, confirming that the paid capital has been deposited with them. These documents and information must then be presented before a Notary Public by the proposed company's appointed representative. After notarisiation, the Notary Public lodges the Articles of Incorporation and By-Laws with the Department of Registration and Trade Register. The Articles of Incorporation are then published in the Official Gazette.
Powers Of The Company
As dictated by the objects in the Articles of Incorporation.
Language Of Legislation And Corporate Documents
The Legislation is published in either French or German. The corporate documents can be in any language, provided they are accompanied by a French or German translation.
Registered Office Required
Yes, must be maintained in Luxembourg.
Shelf Compamies Availanble
Yes; please contact us
Time To Incorporate
Subject to adhering to the pre-requisite criteria, a company can be incorporated in two days.
Any name that is similar or identical to an existing name. Any name of a major international corporation, where written consent to incorporate is not available. Any name which in the opinion of the Trade Register is undesirable or offensive. There are no other specific rules regarding name restrictions. However, it is normal practice for the Trade Register to refuse names that are associated with the banking and insurance industries and any name that would suggest government patronage.
Language Of Name
Can be in any language using the Latin alphabet. The Public Register may request a French or German translation if a foreign language is used.
Names Requiring Consent Or License
The French, German and foreign names for bank, buildings society, savings, insurance, assurance, reinsurance, fund management, investment fund, council, municipal, co-operative or the foreign language equivalent.
Suffixes To Denote Limited Liability
Société Anonyme, SA or AG.
Disclosure Of Beneficial Ownership
Authorised And Issued Share Capital
S.A. EUR 31,000 S.A.R.L. EUR 12,500.
Classes Of Shares Permitted
Registered shares, bearer shares (only for S.A.), preference shares and shares with or without voting rights.
Corporate income tax applies to all resident companies and to Luxembourg permanent establishments of foreign companies. Resident taxpayers are liable to tax on their world-wide income, unless income is exempted under the provisions of applicable double tax treaties. Non resident taxpayers are liable to tax only on their Luxembourg sourced income. A company is considered to be a resident tax payer if its place of management is located in Luxembourg.
Corporate income tax includes two taxes applicable to the profits of a company:
Corporate income tax (l’impôt sur le revenue des collectivités)
Municipal business tax (l’impôt commercial communal)
Since 1 January 2006, companies incorporated in Luxembourg are subject to progressive corporation income tax (including municipal tax) with rates rising from 0% to a maximum 29.63%.
Double Taxation Agreements
Up until now, Luxembourg has signed bilateral taxation treaties with more than 50 countries. This tax treaties’ network is constantly expanded. The complete list of the double tax treaties signed by Luxembourg can be delivered upon request.
Financial Statements Required
Yes. An annual audit is compulsory for S.A. Not for S.A.R.L. (exception).
The minimum number of directors is one for S.A. Companies and one for S.A.R.L Companies. They may be natural persons or bodies corporate. They may be of any nationality and need not be resident in Luxembourg.
The Luxembourg Companies Acts do not provide for the appointment of a company secretary.
The minimum number of shareholders is one for S.A. Companies and one for S.A.R.L. Companies.
Content supplied by TBA & Associates