Setting up a company in Luxembourg
Luxembourg is often chosen when setting up a company. Its particular geography is not the only reason to consider when setting up a company in Luxembourg.
The main advantages of Luxembourg are:
- Political and social stability under a parliamentary monarchy;
- High standard of living which places Luxembourg at fisrts in terms of GDP per capita far before Switzerland, the United States (USA), Japan or even the Emirates (UAE), with high growth and low unemployment (about 6%);
- A cosmopolite population (700.000 inhabitants) since 48% of its people are from foreign nationalities and speak different languages: French, German, Luxembourgish, English, Dutch…
- Welcoming financial industry, IT companies, data-centers, and space industry...
- A logistical hub, air freight, rail and road transport.
Because of its geographical location, Luxembourg is attractive to datacenters and to tech companies, videogames companies and e-commerce companies. The current fiber optic network allows Luxembourg to be connected to the biggest online exchange places in Europe.
AAA rating for Luxembourg is regularly confirmed with stable forecast highlighting its economics, politics, its responsible public finance management. The country makes the most of current account surplus, a net international credit balance and at last, a well capitalised banking sector. Despite the risks linked with rise of interest rates and the drop of real estate market, the economy remains shock-resistant through strong labour market and efficient politics governance.
Exemplary tax and social competitivity:
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Social security rates:
Borne by the employee: 12.95 %
Borne by the employer: 13.39 %
To these is added the accident insurance of 0.65% and the employer contribution that varies between 0.23% and 2,66% according to the class. These contributions are born by the employer.
Combined social security rates varies between 27.22% and 29.65% which is one of the lowest rates in Europe.
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Weekly working hours: 40
Corporate tax
The corporate tax rate is 15% of operating income for income below 175 000€ and 17% for income over 200 000€ (intermediate rate applies between 175.000 ans 200.000 EUR).
Communal business tax
It is a tax calculated on operating income.
Allowance of 17.500 EUR.
Tax base: 3% of operating income after allowance.
Wealth tax
This is a calculated tax based on the net wealth of the company (capital, reserves and results carried forward).
Chamber of Commerce membership fee
This annual fee is mandatory.
Value added tax (VAT)
Super-reduced rate: 3% for food (restaurants included except for alcohol) and a few products and services such as shoes or clothes for children,people transportation…;
Reduced rate: 8% for hairdressing, certain pieces of art, sales of flowers…
Intermediate rate: 14% for printed ads and tailored clothing;
Standard rate: 17% for all other goods and services.
