Luxembourg attracts many entrepreneurs thanks to its stable legal framework, its readable tax system and its dynamic economic environment. Setting up a company there nonetheless follows a precise path, marked out by mandatory steps.
This article gives a concrete and realistic picture of it:
- the legal forms available;
- the sequence of formalities;
- the actual costs;
- the timeframes genuinely observed.
I. Choosing the right legal form
The choice of structure determines the capital to be raised, the level of liability and the credibility of the business. The table below summarises the most common forms.
| Form | Minimum capital | Liability | Typical use |
|---|---|---|---|
| Sole proprietorship | None | Unlimited | Freelancers, self-employed |
| SARL-S | From EUR 1 | Limited | Consulting, services, start-up |
| SARL | EUR 12,000 | Limited | The most widespread form |
| SA | EUR 30,000 | Limited | Larger-scale projects |
| SCS / SCSp | None (SCSp) | Depends on partners | Private equity, funds |
Each form meets a different need:
- Sole proprietorship: the quickest to launch, but it exposes personal assets.
- SARL-S: allows you to start at lower cost, but is reserved for individuals.
- SARL: the benchmark for most projects.
- SA: aimed at larger structures.
- Limited partnerships (SCS, SCSp): favoured by private equity for their contractual flexibility.
II. Preparing the draft articles of association
For companies, draft articles of association must be prepared even before the authorisation application. The ministry checks that the stated corporate purpose does indeed match the intended activity.
This is not yet the final deed, but a working document that will be fixed once the authorisation is obtained. The sole proprietorship escapes this step, since it is carried on directly in the individual’s own name.
III. Obtaining the business permit
The business permit is essential in order to carry on a commercial, craft, industrial or consulting activity. Issued by the Ministry of the Economy, it rests on three criteria:
- the qualification or experience of the manager;
- their professional integrity;
- the existence of a registered office.
Its cost is modest — EUR 50 in chancery fees — but the timeframe generally runs from two to six weeks depending on the complexity of the file. As the permit is attached to the person managing the business, any change of manager must be notified to the ministry.
IV. Opening a bank account and paying up the capital
Once the permit has been granted, a business bank account can be opened in the name of the company being formed, and the capital is paid up into it in accordance with the articles. Formalities are lighter for the SARL-S.
For a sole proprietorship, a business account is not compulsory but remains strongly advisable in order to keep private and business flows clearly separate.
V. Signing the articles and registering the company
This step formalises the birth of the company. SARLs and SAs must be incorporated before a notary, whereas the SARL-S can be created by private deed using standardised articles.
The notary checks the capital, records the business permit and proceeds with registration in the Trade and Companies Register (RCS). The business permit then becomes definitive.
VI. Tax registration and initial obligations
Launching the activity involves several formalities:
- VAT: a number must be applied for from the Registration Duties, Estates and VAT Authority where the activity is subject to it.
- Direct taxes: the sole trader declares the start of activity to the Direct Tax Authority (personal income tax); a company has its tax file opened after registration with the RCS (corporate income tax).
- Social security: affiliation with the CCSS is required whatever the form, for the self-employed manager and, where applicable, for employees.
VII. Actual costs and timeframes
Excluding share capital, setting up a company costs between EUR 1,000 and EUR 1,600 depending on the form chosen, to which must be added business domiciliation, generally charged at between EUR 150 and EUR 300 per month.
This domiciliation must be provided by a regulated professional — chartered accountant, lawyer or bank — within the limits of the services they are authorised to render: a chartered accountant, for example, cannot offer “pure” domiciliation detached from any professional service.
In terms of timing, a complete incorporation takes on average four to eight weeks.
| Step | Indicative time |
|---|---|
| Preparing the file and the articles | ≈ 1 week |
| Business permit | 2 to 6 weeks |
| Incorporation and registration | 1 to 2 weeks |
| VAT and CCSS affiliation | 1 to 2 weeks |
VIII. Points to watch
- the registered office must exist as of the filing of the permit application;
- the corporate object must correspond precisely to the actual activity, failing which it is refused;
- foreign managers must provide complete supporting documents (criminal-record extract, proof of experience);
- the allocation of a VAT number may be refused if economic substance is not demonstrated.
Conclusion
Setting up a company in Luxembourg is a clear and relatively quick process provided it is well prepared. The sequence is as follows:
- draft articles of association;
- business permit;
- payment of the capital;
- notarial deed;
- registration with the RCS;
- tax and social security registrations.
This path makes it possible to launch the business within one to two months. At Ease Advisory, we help you choose the right form, put together a solid permit application and carry out all the formalities through to registration and the opening of the tax files. A project in mind? Let’s talk before you start — that is where time is saved.
Need support on this topic? Discover our legal & administrative service in Luxembourg or get in touch with Ease Advisory.